Seafire: Don't be scared off by SolidEngineer - ABG

Strong report when properly adjusted for SolidEngineer
Targets 15% sales CAGR (10% organic) and 10% EBITA margin
Trading at 9x '23e adj. EV/EBITA, 30% below peers


Beware of SolidEngineer

In Q4 Seafire delivered sales of SEK 224m, representing growth of 62% (1% organic), and adj. EBITA of SEK 9m, for a margin of 4%. The results were affected negatively, however (just like in Q3), by the accounting change made in SolidEngineer where revenue that would previously have been recognised at signing is now spread out over the contract period. Adjusting for this effect gives sales of SEK 257m and adj. EBITA of SEK 23m, for a margin of 9%. We anticipated this, but the effect on adj. EBITA was significantly larger than the SEK 6m we expected, meaning that when adjusting for this the company beat our adj. EBITA estimate by 34% (unlike what we wrote in our fast comment). Keep in mind that none of this missing revenue is lost as it will be recognised over '23-'24. All in all a strong quarter. The reporting segments were renamed to Products and Industrial components during the quarter. Unlike what we wrote in our preview, SolidEngineer did not switch segments.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/Seafire/Equity-research/2023/2/seafire---dont-be-scared-off-by-solidengineer/