Elos Medtech - Robotic surgery is doing wonders
18% EBIT beat vs. our expectations on high margins EBIT up 13-12% ’21-‘23e on extrapolated margins 16x ‘22e EV/EBIT with 27% EBIT CAGR ’20-‘23e Solid margin drove 18% EBIT beat Elos Medtech reported yet another impressive quarter, with particularly strong EBIT margin of 14. 6% (ABGSCe 12%), driving an EBIT beat of 18% vs. our expectations.
Dental and Orthopedics was 51% and 58% better on EBIT vs. ABGSCe, respectively. Dental grew 174% y-o-y and reported 10% higher volumes, and 4.
9% higher EBIT margin than we expected, as the dental market has returned to normal. While Orthopedics delivered 10% lower volumes than expected, its EBIT margin was a sizeable 8. 3% higher than we expected, coming in at 18.
9% (10. 4% in Q1’21). It was largely a result of a beneficial sales mix with a large share of robotic surgery products combined with staffing efficiencies.
Life Science performed worse than expected, with sales and EBIT 9% and 8% below what we expected, respectively, as a result of lower demand from hearing implant customers. Group sales were SEK 181m, up 53% y-o-y (63% organically) and up 6% sequentially. Estimates up on higher profitability We raise EBIT by 13% for both ’21 and ‘22e and by 12% for ‘23e, mainly derived from increased margin assumptions (EBIT margins up 1.
7%-1. 5% ’21-‘23e). We think that the demand was improving m-o-m throughout Q2 and expect demand to continue at a high level in H2.
However, we note that Dental and Orthopedic volumes have moved quite unpredictably m-o-m during H1, and that any new precautions relating to COVID-19 (infection rates has begun to accelerate again since bottoming late June) may result in a rapid decline of volumes, which is not reflected in our estimates. Quality company with strong end-markets at 5% FCF yield Elos Medtech is offering solid exposure to strong growth trends in Robotic Surgery, Diabetes and IVF while also growing rapidly through own Dental products (14. 5% of sales in Q2’20, up 121% y-o-y).
We expect it.
