StrongPoint: Ambitions kept amid a soft quarter - ABG

Q3: EBITDA NOK 4m – soft but broadly in line with our NOK 5m
2025 ambitions kept, company needs larger project wins in Q4
'23 EPS down 3%. ~24e adj. P/E ~7x


Q3: lower sales but higher GM

StrongPoint's Q3 was soft, with sales down 15% y-o-y (no M&A help this quarter). Total revenues came in at NOK 293m (-6% vs. ABGSCe). Revenues from Norway were up 8% while Sweden was down 40% y-o-y. COGS was lower than expected, giving a gross margin of 44% vs. our estimate of 39% due to better product mix in Sweden, i.e fewer ESL deliveries. StrongPoint has seen higher personnel expenses in Sweden and the Baltics, where most employees are located. This led to opex rising 25% y-o-y., i.e. clean Q3 EBITDA was NOK 4m (ABGSCe NOK 5m), down from NOK 21m in Q3'22. On a positive note, sales from Baltics were up 16% y-o-y, indicating that the region could become a key market for the company in the future. We have taken a more cautious view, and reduced our '23e EBIT by 2% while keeping our '24e estimates largely unchanged.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/StrongPoint/Equity-research/2023/11/strongpoint---ambitions-kept-amid-a-soft-quarter/