We raise our H1'23e organic growth estimates somewhat, but are more cautious on H2'23e given Proact's lumpiness in the system business as well as the tough comparable growth rates it will face. On a FY 2023 basis, we estimate 0% organic growth and an adj. EBITA that declines -1% on the basis that it increased 52% in 2022. All in all, we raise our 2023-24e adj. EBITA estimates by 3-4% post the strong Q4 report.
On the way to its margin target
Proact targets an 8% EBITA margin, vs 6.6% in 2022 and our estimate of 6.9% in 2025e, and we think this is possible over some years as the mix services/system sales needs to improve, both organically but also through M&A. The company reduced its ROCE target in the report, from 25% to 20%, which we find relatively neutral as we already forecasted a ROCE below 20%. On our updated estimates the share trades at 8.8x EV/EBITA 2023e, which is 25% below IT reseller peers.
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