We reiterate our view that end-market demand for automated mooring and shore power remains strong due to: 1) regulatory drivers, 2) awareness of environmental benefits, and 3) productivity gains. Thus, the addressable market potential of >EUR 1.3bn (ABGSCe) remains intact, in our view, and Cavotec should be able to drive significant earnings growth while maintaining double-digit margins. However, we believe that supply chain issues will prolong lead times. Moreover, we believe that the impending departure of CEO Mikael Norin (who joined in 2017) could raise the execution risk. Thus, we lower 2022e-2023e sales by 14-9% for 2022e-2023e. In combination with 5.5-10.5% adj. EBIT margins (f. 9.3-12.4%), this results in significant negative EBIT revisions. With the YE’21e backlog at an ATH of EUR 126m (book-to-bill of 1.3x), this would cover ~70% of 2022e sales (~50% historically). In addition, service sales now correspond to ~20% of sales YTD.
Q4 details
We expect the backlog to arrive at EUR 126m (up 5% q-o-q, +49% y-o-y) driven by strong order intake within ‘New Cavotec’ (excl. airports). We forecast sales of EUR 40m (-6% y-o-y organically) and H1’22e sales growth of -6%, before the backlog supports ~40% growth y-o-y in H2’22e. Finally, we expect Cavotec to remain loss-making in H1’22e due to low volumes, cost inflation and growth investments (EUR -1.5m in Q4’21, EUR -5.4m in H1’22e, EUR +15m in H2’22e). Although gearing in relation to earnings looks elevated, we forecast a YE’21e net debt excl. leasing of EUR 3m, with the potential airports sale providing support.
Airports sale delayed, we believe exit will happen in H1’22
The delayed exit of Airports (sales of EUR 36m 2021e) is unfortunate in our view, but we understand that discussions are in an active phase. For ’19-’23e, we...
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