Based on the Q2 report alone, the implicit revisions would mean that our group sales and adj. EBIT estimates should come down by 4-3% and 10-15%, respectively, for FY’21e-‘22e. However, keep in mind that numbers are low in absolute terms and that the stronger than expected order momentum should support sales during late H2’21 and onwards.
Final thoughts
Although we had expected a faster sequential improvement in sales with short lead times, we find it positive that order momentum is picking up, which is key for the medium-to-long term. Once orders begin to support topline growth, we see good potential for Cavotec to reach its 10-12% margin targets. The stock is up 10% L1M (+13% yesterday) vs. the Carnegie Smallcap index at +8% and is currently trading at (pre-Q2 numbers) 10-7x EV/EBIT ‘22e-‘23e.
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