Boule Diagnostics: Signs of testing volumes coming back - ABG
This is a third party research report and does not necessarily reflect our views or values
Continued high order book due to component shortages
11% q-o-q consumables growth is a good sign
’20-23e EBIT CAGR of 10%, share at 13x ‘22e EV/EBIT
Boule’s Q3’21 net sales of SEK 112m were 11% below our expectations, as component shortages continue to cause trouble. That said, it sold 996 systems, an improvement q-o-q, while ending the quarter with an order book at unusually strong levels. The system ASP of SEK 34k (Q3’20 SEK 40k) was notably lower in the quarter, reflecting continued high sales to markets in southeast India and Africa. While these instrument sales may be at a lower gross margin, the India 91% y-o-y consumables increase shows that the model is bearing fruit. The OEM business had another good quarter, fuelled by the large long-term contract that it signed a year ago. Considering that sales continue to be lower than normal, and given the ongoing hurdles in supply and logistics, we believe an EBIT margin of 11.6% shows solid cost control in the quarter.
We update our estimates, mainly reflecting near-term lower instrument sales, causing ’22e-23e EBIT revisions of 5-4%. The pandemic is increasingly a thing of the past, improving the outlook for Boule, where we see a ’19-23e EBIT CAGR of 10%. Launch of the new product platform and the 5-part system is less than one year away, which could be another potential growth levy ahead. The share is at a ‘22e EV/EBIT of 12.6x, 27% below its historical average.
11% q-o-q consumables growth is a good sign
’20-23e EBIT CAGR of 10%, share at 13x ‘22e EV/EBIT
Boule’s Q3’21 net sales of SEK 112m were 11% below our expectations, as component shortages continue to cause trouble. That said, it sold 996 systems, an improvement q-o-q, while ending the quarter with an order book at unusually strong levels. The system ASP of SEK 34k (Q3’20 SEK 40k) was notably lower in the quarter, reflecting continued high sales to markets in southeast India and Africa. While these instrument sales may be at a lower gross margin, the India 91% y-o-y consumables increase shows that the model is bearing fruit. The OEM business had another good quarter, fuelled by the large long-term contract that it signed a year ago. Considering that sales continue to be lower than normal, and given the ongoing hurdles in supply and logistics, we believe an EBIT margin of 11.6% shows solid cost control in the quarter.
We update our estimates, mainly reflecting near-term lower instrument sales, causing ’22e-23e EBIT revisions of 5-4%. The pandemic is increasingly a thing of the past, improving the outlook for Boule, where we see a ’19-23e EBIT CAGR of 10%. Launch of the new product platform and the 5-part system is less than one year away, which could be another potential growth levy ahead. The share is at a ‘22e EV/EBIT of 12.6x, 27% below its historical average.