Addtech: Smashing our high expectations - ABG
This is a third party research report and does not necessarily reflect our views or values
Adj. EBITA 8% above consensus
‘21/22e-‘23/24e EBITA up 3-2%
37x NTM EV/EBITA, 160% above 5y average of ~14x
Addtech delivered a strong Q2’21/22, beating our expectations. Sales growth remained high, at 20% (10% organic, 10% M&A), corresponding to SEK 3,257m (2% vs. ABGSCe 3,206m, 0% vs Infront consensus 3,244m). The impressive growth was driven by all business areas, partly intensified by the prevailing shortages of components and prolonged lead times, causing stockpiling for contingencies. The adj. EBITA was SEK 431m (11% vs. ABGSCe 388m, 8% vs cons 401m), for a margin of 13.2% (ABGSCe 12.1%, cons 12.3%). In our view, the record margin shows Addtech’s ability to handle the shortage of components in an exemplary manner. The market situation, combined with continued good cost control and well-handled price increases from suppliers, contributed to the record high margins.
The share has traded strong into the numbers, up 27% in the last month and is now trading at 37x NTM EV/EBITA, or ~20% above core peers (Indutrade, Lagercrantz, Lifco and Sdiptech) and 160% above its 5y average. For ‘20/21-‘23/24, we expect a sales CAGR of 9% and adj. EBITA CAGR of 10%. However, we do not include any more acquisitions in our estimates and management has said that the M&A pipeline is strong, so there is upside risk to our forecasts.
‘21/22e-‘23/24e EBITA up 3-2%
37x NTM EV/EBITA, 160% above 5y average of ~14x
Addtech delivered a strong Q2’21/22, beating our expectations. Sales growth remained high, at 20% (10% organic, 10% M&A), corresponding to SEK 3,257m (2% vs. ABGSCe 3,206m, 0% vs Infront consensus 3,244m). The impressive growth was driven by all business areas, partly intensified by the prevailing shortages of components and prolonged lead times, causing stockpiling for contingencies. The adj. EBITA was SEK 431m (11% vs. ABGSCe 388m, 8% vs cons 401m), for a margin of 13.2% (ABGSCe 12.1%, cons 12.3%). In our view, the record margin shows Addtech’s ability to handle the shortage of components in an exemplary manner. The market situation, combined with continued good cost control and well-handled price increases from suppliers, contributed to the record high margins.
The share has traded strong into the numbers, up 27% in the last month and is now trading at 37x NTM EV/EBITA, or ~20% above core peers (Indutrade, Lagercrantz, Lifco and Sdiptech) and 160% above its 5y average. For ‘20/21-‘23/24, we expect a sales CAGR of 9% and adj. EBITA CAGR of 10%. However, we do not include any more acquisitions in our estimates and management has said that the M&A pipeline is strong, so there is upside risk to our forecasts.