Sintercast: Miss on lower gross margin and installations - ABG

Q2 EBIT of SEK 7.2m (-43% vs. ABGSCe at 12.6m)
Expect negative revisions on isolated Q2 numbers
18x ’22e EV/EBIT, div. yield 4-7% for ’21-’23e

Sales of SEK 28m (-16% vs. ABGSCe at 34m), +51% y-o-y. As was pre-announced in a press-release, volumes were strong at 3.2m annualised engine equivalents (1.6m Q2’20, 2.9m Q1’21) and 76,300 sampling cups (19,800 Q2’20, 44,600 Q1’21). EBIT amounted to SEK 7.2m (-43% vs. ABGSCe at 12.6m), for a margin of 26% (ABGSCe 37%), up from 4% in Q2’20. Series production sales were SEK 27.8m (ABGSCe 29.7m) and equipment sales SEK 0.2m (ABGSCe 3.3m) as travel restrictions caused much of the 2021 installation activity to be deferred to H2’21. The major EBIT miss stemmed partly from a lower gross margin and partly from lower than expected equipment sales.

On our estimates, the share is currently trading at 18x ’22e EV/EBIT whilst offering 4-7% dividend yield ’21-’23e. As the company has historically distributed ~100% of EPS as dividends, we derive a fair value range of SEK 137-248 per share by discounting future dividends, assuming a cost of equity of 8-12%. The valuation range is pre-Q2 revisions.

Länk till analysen i sin helhet: https://www.introduce.se/foretag/sintercast/Equity-research/2021/8/sintercast---miss-on-lower-gross-margin-and-installations/