System sales likely to decline from high base in 2023e
Proact posted yet another strong quarter driven by system sales (i.e. hardware servers for data storage), driving a group organic growth of 21% in the quarter (system sales organic growth 34%, service sales organic growth 6%). The systems business is lumpy: after a more challenging 2021 (-12% organic growth), we now estimate 2022e to grow 24% organically with one quarter left. Q4e is facing easy comps from a PW in Q4’21 (system sales dropped organically -24% in Q4’21) and Proact still has around half of the SEK 200m extra backlog from H1’22 yet to deliver. On the back of this strong development, and lower market estimates for IT hardware (Gartner forecasts the global IT device market to drop -8.4% in 2022e and another -0.6% in 2023e in its latest update from 19 October), we estimate a -8% organic system sales growth in 2023e, still from a higher base. The service revenues continue to develop well, with 6% organic growth in 2022e driven by growth in cloud revenues. Because service revenues also stem from new contracts related to system deals, we forecast slightly lower organic growth in 2023e of 2%, before returning to 5% organic growth in 2024e.
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