Q4 saw the revenue falling short of expectations, however, the product mix was higher than expected in high margin products, leading to a strong beat on gross margin (38.3% vs. FactSet cons. 26.2%). The company additionally registered a material increase in order intakes, which was up 290% at SEK 287m, with the total order backlog landing at SEK 540m (176m of which are low to zero margin subcontractor work)
FY’22 EBIT margin guidance introduced
FY’22 guidance stands at SEK 264-192m, corresponding to a 23-37% growth rate. (ABGSCe at SEK 278m, cons. at SEK 301m) and a newly implemented EBIT margin guidance of better than -15% (ABGSCe -12.9% cons. 2%). The low EBIT margin, is driven by the fact that FY’22 order deliveries will be high on low margin orders which also include subcontractors, which have gross margins close to zero. They are however preparing for the supply chain to improve as well, as they expect to increase the amount of product orders over time. The low margin expectations for FY’22, corresponds to an estimated margin acceleration postponement of ~1y vs. previous consensus estimates.
Five-year strategy announcement could be inflection point
Looking further ahead, GomSpace is working on a new five-year strategy plan to take over from their turn-around strategy. The new strategy will focus on firstly becoming a champion within Europe and next try and focus on the US market. While we lower our scenario based fair value range to DKK 7-45 (8-47) to reflect the likely postponed margin acceleration, we do note that the implementation of the new five-year strategy could be an inflection point, potentially providing some light on the company’s path to profitability.
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