BTS ended 2021 on a high note with another record year, reaching ATH sales and EBITA. Q4 ’21 was relatively in line with our expectations (sales were -4% and EBITA -2%) with FX adjusted sales growth of 33%. BTS also raised its EBITA margin target to 17% (15%) having reached 15.0% in 2021. What mitigates margin increases short-term in our view are 1) a larger share of revenues coming from physical deliveries, 2) increased salaries for consultants, and 3) increased employee turnover post two low years in 2020-21. This makes us believe that the adj. EBITA growth in 2022 will mainly be sales driven, which we feel confident in given 1) the strong market demand, 2) BTS gaining market share and 3) already completed acquisitions. The balance sheet is net cash and the fragmented market offers further acquisitions possibilities as well.
Long term EBITA margin target raised, EBITA up 6%
We are careful to fully include the new margin target as we think that the margin development near term will be more flattish. Beyond 2022e, we estimate the margin to increase by 40bps per year reaching 15.5% in 2024e. There could be some upside to that number if BTS continues to reach its margin target within ~4 years (which would mean 2025e), as they have done historically. As a result of the Q4 report, our underlying estimates are left relatively unchanged, with ‘22e-‘23e sales coming down 1-2% due to the sales miss and adj. EBITA down 0-1%. When updating for higher FX, we end up raising ‘22e-‘23e sales and EBITA by 5% and 6%, respectively.
Share at 19.0x 2022e EV/EBITA
Our 2022e adj. EBITA of SEK 343m, for a margin of 14.7% (15.0% in 2021) and 19% growth y-o-y, provides upgrade potential to the 2022 guidance. An earnings growth of ~20% is usually phrased as “significantly better” by BTS.
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