As expected, BTS has started to see more hesitant customers outside of the US as well, although it highlights that it won some larger deals in the quarter as well as new customers. For us, it sounds like a typical downturn that makes BTS stronger, as we have seen several times before. The market is currently weak and has longer sales cycles, but BTS wins more than competitors and gains market share. The -2% organic growth in Q2 on the group level vs. a tough comp (21% in Q2'22) is also a solid figure, in our view. However, with the number of employees at the end of Q2 being cut by 35 (-3% q-o-q and -5% adjusting for the addition of 25 people from the Boda Group acquisition in Q2), marking the first q-o-q reduction since Q4'20, we lower our H2e sales estimates somewhat, although this is supportive for cost estimates. The guidance downgrade was not entirely surprising to us, and implies a return to earnings growth in H2e. We estimate 27% EBITA growth in Q3e and 10% in Q4e, driving a 2023e EBITA growth of 4% vs 2022.
We cut EBITA by -2-4%
As a result of the Q2 beat (EBITA +13% vs us) alongside reduced estimates for H2e mentioned above, we make small negative estimate revisions. We reduce sales by -2% and EBITA by -2-4% in 2023-25e.
Trading at a discount vs. history
On our revised estimates, the share is trading at 13.0x 2023e EV/EBITA and 10.3x 2024e, which is a discount to its history. We also note that the current EV/head is SEK 4.1m, a -16% discount vs. its five-year average valuation. Beyond 2023e, we estimate BTS to grow EBITA by a CAGR of 20% to 2025e, still below the company's target of growing sales 20% per year and reaching a 17% EBITA margin, which would correspond to a 36% EBITA CAGR in 2024-25e and is some 29% above our 2025e estimate.
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