Seafire: Positive guidance for Q2 from management - ABG

Organic growth of 21% (ABGSCe 6%)
Adj. EBITA slighly weaker than expected on cost inflation
Estimates up on acquisition of SolidEngineer

Q1 results
Seafire delivered strong sales of SEK 168m (9% better than ABGSCe), up 120% y-o-y whereof 21% organic (ABGSCe 6%) with Nordbutiker and Linguacom as the main drivers. As expected, cost inflation and component shortage contiued to weight on margins, however slighly more than we had penciled into our estimates. Adj. EBITA was SEK 11.4m (15% or 2m below our expectations at 13.4m), corresponding to a margin of 6.8% (7.3%). It seems Thor Ahlgren had a significantly weaker Q1’22 compared to Q1’21, largely due to production cuts at customers due to component shortage. The decrease was up to 30%, which significantly affected sales and earnings. All in all, we see Q1 as a solid start to FY’22 and management says Q2 has started strong.

Estimate changes and outlook
On isolated numbers, adj. EBITA estimates should come down 2% on the estimate miss. However, latest acquisition of SolidEngineer should add ~14% to the group’s ’22e sales and ~12% to adj. EBITDA on a pf basis. Management says Q2 has started strong but that challenges with cost inflation, component shortage etc remains.

Final thoughts
The share trades at 13-11x ‘22e-‘23e EV/EBITA on our pre-report estimates where the latest acquisition of SolidEngineer is not included. SolidEngineer was founded in 1996 and has ~40 employees, with ’21 sales and adj. EBITDA of SEK 101m and SEK 14m, respectively. The company has grown its sales and adj. EBITDA with ’15- ’21 CAGRs of 11% and 23%, respectively.
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