New FVR of SEK 19-28 (27-37)
We expect a y-o-y margin drop
We expect Q3 sales of SEK 217m, close to the Q2 figure. This would be an increase of 5.9% y-o-y, of which 4.2% organic. This estimate should be supported by a strong orderbook coming out of Q2 keeping sales up (Q2 R12M book-to-bill of 1.05), while continued component shortages are limiting sales growth. We estimate adj. EBITA of SEK 13m, corresponding to a margin of 6.0% (9.6%), down by 3.6pp y-o-y, mainly due to the continued pressure on gross margins that management flagged for in conjunction with the Q2 report, as well as a Q3’21 margin boost stemming from royalties, which are usually received in Q4. We expect the Process & Environment segment to achieve sales of SEK 162m (154m) with an EBITA margin of 7.0% (11.5%), growing 5.7% y-o-y (4.0% organically). Our estimates for the Materials technology segment are sales of SEK 54m (51m) with an EBITA margin of 8.0% (8.2%), growing 6.7% y-o-y (5.0% organically).
Economic downturn dampens outlook
We leave ‘22e-‘24e sales unchanged, but lower our margin estimates due to persistent component shortages and a deteriorating macroeconomic outlook. Our adj. EBITA estimates are down by 13% for ‘22e and 22%/15% for ‘23e/’24e. This means we now estimate a 17% 21’-‘24e adj. EBITA CAGR. The lower margin estimates also affect ND/EBITDA estimates. We now expect ND/EBITDA to go from 2.2x in ‘22e to 1.5x and 1.1x in ‘23e and ‘24e respectively, which still puts the company in a fairly good financial position.
New fair value range of SEK 19-28 (27-37)
The share is trading at 12-9x ‘22e-‘23e EV/EBITA. As a result of our reduced margin estimates, we lower our fair value range to SEK 19-28 (27-37) per share, corresponding to 9-12x ‘23e EV/EBITA.
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