VBG Group - A record set of numbers drives big beat
Margin progression continues; group EBITA of ~17% (13) We raise ‘21e EBITA by 19%, ‘22e-‘23e up by ~10% Trading at 15x ’21e EV/EBITA, 5% FCF yields in ’21-’23e Strong Q1 earnings helped by positive price mix VBG reported a quarterly all-time-high set of numbers, mainly driven by strong underlying demand, tight cost control and high production utilisation. Group sales came in at SEK 901m (1% vs. ABGSCe), which was -6% y-o-y, of which 3% was organic (ABGSCe at 1%) but held back due to FX headwinds (-9%). Adj.
EBITA came in strong at SEK 150m (vs. ABGSCe at SEK 114m), for a margin of 16. 6% (13.
0%) vs. ABGSCe at 12. 7%.
T&TE once again showed its strength and met the markets’ high demand for VBG’s products that live up to the new and stricter safety regulations. The high volumes in tandem with high capacity utilisation, drove an all-time-high T&TE margin of 24% (21%) (ABGSCe 21%), which had a clear impact on the group level. MCC sales came in -13% y-o-y, but with a strong margin of 10% (9%) due to positive mix effects from the off-road segment, the ongoing restructuring work VBG is carrying out, and the reduced cost base.
RPT reported a favourable price mix and a stellar margin of 22% (11%). Finally, management highlights that material and component shortages can come to drive cost inflation and affect margins in the following quarters. Momentum to continue; ‘21e EBITA up by ~19% We expect VBG’s strong business momentum to continue, with high margins supported by favourable price mixes across all segments and tight cost controls.
Besides, we do not expect margin improvements to be diluted by MCC’s prior issues with weak end-markets and low margin operations, as the restructuring work seems to have a positive impact on margins. All in all, we leave our ‘21e-’23e sales expectations unchanged, but raise our ’21e EBITA by 19% and ‘22e-‘23e by roughly 10%. Trading at 15x ’21e EV/EBITA, 5% FCF yields in ’21e-’23e On our estimates, the share is trading at 15x EV/EBIT.