For the second quarter in a row, C-RAD delivered record gross margins, this time reaching an impressive 66% (58% last year, ABGSCe 62%). However, it was largely due to a shift in the sales mix as APAC sales declined sharply y-o-y, while EMEA, with margin accretive distribution, performed well. We expect that the geographical sales mix should normalise during 2022 and bring the gross margin to ~61%. Orders were strong at SEK 133m, up 9% against tough comps and 15% better than ABGSCe. In part, the strength was driven by one large order win of SEK 20m (adds ~16% to order growth y-o-y). Sales, on the other hand, was challenging as the Q4 Omicron surge postponed product installations. This was unaccounted for in our estimates and led to a 10% sales miss, and consequently a 14% miss on EBIT vs. ABGSCe, as well. We have learned that installation plans for linac companies are relatively soft for Q1’22, which is reflective of hospital installation willingness. As C-RAD’s products are generally sold in conjunction with new linac installations, we have cut H1’22 sales estimates. We expect that lost Q1’22 sales are just moved forward in time and expect a sharp recovery for H2’22 as the hospital environment normalises, supported by a strong order backlog for C-RAD. There is a substantial hospital capex need after two years of underinvestment, combined with a positive hospital budget environment, supporting continued high order intake in 2022.
Minor changes to estimates
We lower ‘22e sales by 1%, with the expected H1 weakness largely offset by a stronger H2 and supported by more beneficial FX. Our assumptions are otherwise relatively unchanged.
Set for a 45% EBIT CAGR ’20-’25e at a 50% discount to peers
C-RAD is one of the fastest growing companies in its peer group, with a 45% EBIT CAGR in ’20-’25e, while at
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