Strongpoint: Margin headwinds, but resilient demand - ABG

Q3: revenues above, offset by lower margins
E-com investments set to level off
Resilient customer base – ‘23e adj P/E ~12x


Q3: strong performance in ALS, but group margins lower

StrongPoint’s Q3 was above on revenues (+6% due to seasonally stronger revenues in ALS vs. our forecast), but came with a lower gross margin (37.1% vs our 38.7%). Opex was higher (+5%), driven by its strategic investments in e-commerce (R&D and sales/marketing), while EBITDA was NOK 21m vs. our NOK 24m estimate. If it had only focused on its in-store solutions, StrongPoint says it would have had EBITDA margins of ~10-11%. ALS is performing well, with revenues of NOK 110m and a PTP margin of 14.8% (EBITDA undisclosed). Despite this, we cut our ‘22 estimates materially on the Q3 numbers and lower margin assumptions for Q4. For ‘23e, we make moderate estimate revisions on higher opex and D&A: EBITDA -3% and EPS -7%.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/StrongPoint/Equity-research/2022/10/strongpoint---margin-headwinds-but-resilient-demand/