Addtech delivered a strong Q3’21/22 reporting, beating our and cons. expectations. Sales were SEK 3,586m (7% vs. ABGSCe 3,366m, 6% vs Infront consensus 3,382m) up 13% organically (ABGSCe +7%), M&A 11.0% and FX 0% contribution to sales. Several project deliveries towards the end of the quarter contributed to the high organic growth. The market situation remained very good in all of Addtech’s customer segments, with the exception of the marine sector, where the lack of willingness to invest persisted, although with a slightly positive trend. Adj. EBITA was 459m (14% vs. ABGSCe 404m, 10% vs cons 416m) on margins of 12.8% (ABGSCe 12.0%, cons 12.3%).
Estimate changes and outlook
We expect cons. estimates to come up 2-3% on the beat. The high level of customer activity remains, and its order books have continued to strengthen. On the other hand, management expects this high level of demand to abate somewhat as the lengthy supply chain lead times normalize. Costs associated with sales promotion activities in the companies are expected to continue rising, although good cost control is being maintained, according to management.
Final thoughts
The share is down 24% YTD and trades at ~27x f12m adj. EV/EBITA (25% below peak valuation in December 2021), 44%/81% above its L5Y avg/median, and ~10% above peers. More details expected during conference call at CET 10.00, dial-in: SE +46 85 66 4251, UK +44 33 33 00 0804. PIN: 37900434. Webcast: https://edge.media-server.com/mmc/p/gaynpfmr
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