Motion Display - Solid start to 2021

58% sales growth y-o-y, 17% above ABGSCe We make relatively small estimate changes 1. 4-1. 2x ’21e-’23e EV/sales, 8% ’19-’23e sales CAGR Sales +17% vs. our expectations, but lower gross margin Motion Display (MODI) had a solid quarter and saw sales increase by 58% y-o-y to SEK 4.

7m (albeit against easy comps, with -51% sales growth y-o-y in Q1’20). This was 17% above our forecast of SEK 4. 0m.

Orders were also solid, and showed an increase of 31% y-o-y, leading to an order book of SEK 6. 5m at the end of the quarter (+48% y-o-y). We believe that sales were driven by a broad set of customers, and that MODI’s aim of broadening its customer base is gaining ground, which we see as positive for the future.

While sales were above our expectations, the gross margin decreased 9ppt y-o-y to 35% (14pp below our forecast). This was mainly related to increased payments to distributors. Owing to the lower gross margin, the EBIT loss of SEK 2.

4m was higher than our forecast of SEK 1. 8m. Even so, it should be highlighted that EBIT improved from SEK -3.

3m in Q1’20 due to the higher sales. We expect sales to continue to improve ahead We argue that the strong order book, together with a gradually recovering market, bodes well for continued growth in the coming quarters. Despite better-than-expected sales, we keep our estimates relatively intact, as we already expect improved financials.

That said, we lower our ’21e gross margin by 4ppt on the back of the Q1 report. As such, our ’21e-’23e EBIT is cut by SEK 1. 1m-0.

2m. We still expect MODI to reach break-even in terms of EBIT in 2023e. We estimate positive EBITDA in 2021e, but negative EBIT On our new estimates, MODI is trading at 1.

4-1. 2x ’21e-’23e EV/sales. We forecast a 2.

6% EBITDA margin for 2021e but believe EBIT will remain negative. This is mainly because MODI has relatively high D&A costs, which relate to capitalised development costs on its balance sheet.