Eurocon reported Q4 net sales of SEK 90.2m (+36% y-o-y), which was 19% better than ABGSCe. The deviation was driven by strong net recruitment with Eurocon adding roughly 25 employees in Q4 versus Q3 with the group now consisting of 275 employees. In addition, utilisation rates were also higher than last year. EBIT was SEK 8.8m (7.4m), corresponding to an EBIT margin of 10.1% (4.2%). We were expecting an EBIT margin of 10.1%. SiteBase contributed to the group with an EBIT margin above the group average (it was loss making in Q4 ‘20), which partly explains the uplift last year. The other drivers of the y-o-y margin improvement were higher utilisation rates and an increase in business volume that leads to economies of scale on admin costs. The board proposed a dividend of SEK 0.40 (0.20) per share for 2021.
Positive revisions stem from Q4 net recruitment
We make positive revisions to our sales estimates following the report on the back of the strong net recruitment. Eurocon entered 2022 with roughly 14% more employees than a year earlier and therefore we think it is in a good position to continue to perform organic growth above its financial target of 10%. We also think it will be able to reach its EBIT margin target of 10% in 2022 as it has turned around the SiteBase business during the past year, and this should now start to be accretive to the group’s EBIT margins instead of a drag as it has been for the last couple of years. In total, we raise our ‘22 sales estimates by 8.2%, forecasting a growth rate of ~13%. We keep our EBIT margin assumption at 10.3%, meaning EBIT for ‘22e is also raised by 8.2%.
‘22e P/E of 11x, net cash position, 7.4% expected div. yield
Eurocon has no direct impact from Russia’s invasion of Ukraine. However, if the conflict turns into a full-scale war it could affect its custo
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