Addtech delivered a third consecutive quarter above consensus expectations. Sales were SEK 3,586m (7% vs. ABGSCe, 6% vs. Infront cons.), up 24% y-o-y, of which 13% was organic (ABGSCe +7%). This represents higher organic growth q-o-q despite tougher comps, indicating accelerating demand. All customer segments contributed to the strong growth except the marine sector, where a lack of willingness to invest persisted, albeit with a slightly positive trend. We note that the market situation in the forest and sawmill industry was highlighted as very strong. Adj. EBITA was a record high 459m (14% vs. ABGSCe 404m, 10% vs. cons. 416m), corresponding to a margin of 12.8% (ABGSCe 12.0%, cons. 12.3%). High organic growth combined with solid cost control and profitable project completions explain the impressive margin.
Estimates up 6-7% on beat and positive guidance
We raise our adj. EBITA estimate by 6-7% for ‘21/22e-‘23/24e based on the estimate beat and management guidance. Management expects the adj. EBITA margin to decline slightly due to increased market activity and thus higher costs. However, management are confident that the margin will remain above 12% (11.2% pre-pandemic) in future, driven by cost efficiency, margin-accretive acquisitions and operational leverage. Though we have raised our estimates to better reflect this, we remain somewhat lower than Infront cons. on our ‘22/23e and ‘23/’24e margin assumptions.
The M&A pipeline is loaded
The share is down 23% YTD and is trading at ~27x NTM EV/EBITA (adj.) on our updated estimates, ~9% above peers. All in all, we expect a ‘21/22e-‘23/24e adj. EBITA CAGR of 3%, although the strong M&A pipeline could lead to upside over our estimates in growth terms.
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