Generic: Solid end to a fantastic year - ABG
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Still growing sales >30% y-o-y in Q4
Gross margin declining faster than expected
Opex will likely grow faster in ‘22e than ’20-‘21
Q4: Sales +33% y-o-y, EBIT margin of 16.8% (15.9%)
Generic reported Q4 net sales of SEK 30.5m (+33% y-o-y), 2% ahead of ABGSCe. The growth was driven by higher volumes from existing customers, low churn and the addition of 112 new customer agreements. For 2021, Generic reported a net sales growth of 41% – a fantastic achievement, as the company has only been able to grow revenues by around 15% on average during the previous three years. The agreement with the Swedish Social Insurance Agency was a big contributor to the higher growth rate, but we also believe that Generic stepped up its overall performance in 2021. Q4 EBIT was SEK 5.1m (3.6m), corresponding to 40% growth y-o-y. This was 4% better than ABGSCe and driven by lower-than-expected opex, while the GM was 1 p.p. below expectations. Generic proposed a dividend of SEK 1 per share.
Revisions from lower expected gross margin
Although the Q4 report was ahead of our estimates, we lower our EBIT estimates somewhat for ‘22e-‘23e, as the gross margin is declining faster than we previously assumed. This is driven by a higher share of variable income rather than fixed platform fees. We think ‘22e will be a year of investments for future growth, with Generic ramping up the hiring pace a bit; after two years of rather slow opex growth, we think there is a bit of necessary catch-up that will be beneficial for future growth prospects. Combined with a lower gross margin, we think this will lead to a lower EBIT margin in ‘22e; we forecast 18.2% (19.9%). We also raise our sales estimates by ~1% for ‘22e-‘23e, meaning that we are expecting Generic to grow net sales by 17% in 2022.
‘22e EV/EBIT of 27x, 2.1% dividend yield
The share has been impacted by the recent neg. sentiment around growth stocks and is down 46% in three months. It is now trading at ‘22e EV/EBIT of 26.6x with an expected dividend yield
...Läs mer på Introduce
Gross margin declining faster than expected
Opex will likely grow faster in ‘22e than ’20-‘21
Q4: Sales +33% y-o-y, EBIT margin of 16.8% (15.9%)
Generic reported Q4 net sales of SEK 30.5m (+33% y-o-y), 2% ahead of ABGSCe. The growth was driven by higher volumes from existing customers, low churn and the addition of 112 new customer agreements. For 2021, Generic reported a net sales growth of 41% – a fantastic achievement, as the company has only been able to grow revenues by around 15% on average during the previous three years. The agreement with the Swedish Social Insurance Agency was a big contributor to the higher growth rate, but we also believe that Generic stepped up its overall performance in 2021. Q4 EBIT was SEK 5.1m (3.6m), corresponding to 40% growth y-o-y. This was 4% better than ABGSCe and driven by lower-than-expected opex, while the GM was 1 p.p. below expectations. Generic proposed a dividend of SEK 1 per share.
Revisions from lower expected gross margin
Although the Q4 report was ahead of our estimates, we lower our EBIT estimates somewhat for ‘22e-‘23e, as the gross margin is declining faster than we previously assumed. This is driven by a higher share of variable income rather than fixed platform fees. We think ‘22e will be a year of investments for future growth, with Generic ramping up the hiring pace a bit; after two years of rather slow opex growth, we think there is a bit of necessary catch-up that will be beneficial for future growth prospects. Combined with a lower gross margin, we think this will lead to a lower EBIT margin in ‘22e; we forecast 18.2% (19.9%). We also raise our sales estimates by ~1% for ‘22e-‘23e, meaning that we are expecting Generic to grow net sales by 17% in 2022.
‘22e EV/EBIT of 27x, 2.1% dividend yield
The share has been impacted by the recent neg. sentiment around growth stocks and is down 46% in three months. It is now trading at ‘22e EV/EBIT of 26.6x with an expected dividend yield
...Läs mer på Introduce