Factoring in weaker economic activity, backlog is supportive We raise our ‘22e EBIT by 2% on the back of a strong Q2 report and a solid backlog. However, we lower ‘23e-‘24e EBIT by 9-4%, as we factor in weaker economic activity from H2’22. For ‘22e-24e, we forecast a 22% organic sales CAGR, which in combination with an EBIT margin hike from 5.0% to 12.7% should yield a ‘24e EBIT 4x above ‘22e.
9-5x EBIT ‘23e-‘24e, 4-9% FCF yields, ~20% ROCE from ‘23e Following an extended period of external headwinds and the prolonged exit of its Airports division, we believe that the restructured Cavotec will deliver profitable growth from H2’22e. Underlying regulatory trends remain strong, and we believe that Cavotec should surpass its 12% EBIT margin target in 2024e. We estimate that Cavotec is trading at 24x EV/EBIT ‘22e and 9-5x EBIT ‘23e-‘24e, while offering 4-9% lease adj. FCF yields ‘23e-‘24e, close to zero net debt (excl. leasing) YE’22e and a ~20% ROCE from ‘23e.
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