Maintain fair value range at SEK 170-220 per share
Outlook for EV charging remains very strong
Demand for EV chargers continues to be strong, and GARO has not been able to meet demand fully due to component shortages. The market outlook for E-Mobility remains attractive with adoption of electric vehicles growing faster than we expected 12-18 months ago, which of course supports the EV charging market. GARO continues to be well positioned through its strong position in the electrification market. This creates sales synergies, as when an EV charger is installed there are often other types of electric components needed, but maybe most importantly, electricians are used to working with GARO and therefore help to promote the product to end customers. In addition, GARO is investing significantly in its international expansion, which should support a continued high growth rate in E-Mobility over the coming years. Going forward, we expect E-Mobility and Electrification to grow at ’21-’24e CAGRs of 28% and 9%, respectively, with the structural growth profile of E-Mobility supportive even if the general macro outlook continues to deteriorate over the coming 12 months.
Q2 pause should be temporary
The supply constraints in the E-Mobility business worsened towards the end of Q1 and the company expects E-Mobility sales to be at a similar level in Q2’22 as in Q2’21. We are modelling -2% y-o-y. While this creates uncertainty, we expect the component situation to improve in Q3, as by then COVID-related lockdowns in China should be resolved, while the general availability of semiconductor components should improve following industry-wide investments in production capacity.
We raise EBIT by 6-7% for ’22-’24e
We have raised ‘22e EBIT by 7% after adjusting for the good Q1 (EBIT +27% vs. ABGSCe) as well as the subdued E-Mobility guidance. For ’23-’24e we have raised our EBIT margin by ~1pp, particularly due to the E-Mobility segment. We forecast group EBIT to grow by a ’21-’24e CAGR of 20%. The stock is trading at ~29x, ~23x, and ~20x on EV/EBIT ’22-’24e.
