StrongPoint: Q4 first take: de-risking 2023 rebound - ABG

Q4: better than expected driven by both revenues and opex
StrongPoint reported Q4 revenues of NOK 405m, 10% above consensus NOK 375m. The gross margin was 37.7%, down from 44.2% in Q4 last year, and a tad below cons 38.2% (-0.5pp). EBITDA was NOK 33.6m (8.3% margin), NOK 14m above cons NOK 19m expectation (5.1% margin). EBIT was NOK 21m vs cons NOK 7m, and reported EPS was NOK 0.28 vs cons NOK 0.12. DPS is NOK 0.90, up from 0.80 last year, and well above our expectation of NOK 0.50.

ALS outperforming expectations, opex better
StrongPoint continues to be impacted by components shortages, but growth was still decent: +7 organically (excl ALS). Also, the ALS acquisition is over-performing our expectations, with NOK 101m revenues in Q4 vs our NOK 45m expectation. The -6.5pp GM decline y-o-y is driven by: ALS acquisition diluting margin (-2.5pp), product mix (ESL share), price pressure and FX.

E-com investment levels reduced
On opex, StrongPoint reiterated that it is reducing its investments in e-commerce to reflect current market demand, and says this has impacted payroll and opex positively with ~NOK 4m in Q4 compared to both previous quarters and y-o-y (mainly less use of consultants). If it only focused on its in-store solutions, StrongPoint says it would have achieved EBITDA margins of ~10-11% (vs 8.3% reported).

Strategy update: 2025 targets reiterated
StrongPoint is hosting a Strategy Update Session (SUS) today at 09:15 CET, and has released its presentation material along with the Q4 numbers. Key message is that its 2025 ambitions are reiterated (NOK 2.5bn sales, 13-15% EBITDA margins), driven by: E-com (+62% vs '22), CheckOut (+31% vs '22), and Payment (+21% vs '22). We will revert with more details following the SUS.

2023 estimates de-risked
We expect positive estimate changes following the Q4 report, driven by the better cost performance and stronger ALS growth. Most importantly, we argue the Q4 report materially de-risks the current 2023 estimates, and expect a mid-high single digit share price today.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/StrongPoint/Equity-research/2023/2/strongpoint---q4-first-take-de-risking-2023-rebound/