Q4 turned out to be another lumpy quarter Even though the services business continues to be stable and cloud order intake and revenue posted a new all-time high in Q4 (partly acquisition-driven), system sales (hardware) remain lumpy and are driving earnings volatility. Proact released a profit warning in December, and despite sales came in 3% ahead of our expectations, adj. EBITA missed by -15%. We likely underestimated the profitability in system sales that caused earnings to fall short, as we reduced system sales to a larger extent than EBITA into the report. Since Q1’18 (16 quarters), Proact has now reported an average -2.0% org. growth with a high-low spread of -16% to +16%. This has often been a result of volatile system sales. With an increased share of revenues coming from services (43% in ‘22e vs. 35% in ‘18), org. growth and margin volatility should decline somewhat. That said, Q4 marks another lumpy quarter on the books. Underlying estimates slightly down, reported up due to M&A We reduce our organic growth assumptions following the Q4 report, cutting underlying sales and EBITA by 2-3%. At the same time, we include the acquisition of ahd, which was completed during Q4 and see ourselves raising group sales and EBITA estimates for 2022-23e by 5-6% and 3-7%, respectively. The acquisition of ahd further increases the share of service sales for Proact, which should support margin volatility and boost margins in future. Trading at 8.5x 2022e EV/adj. EBITA On our revised estimates, the share is currently trading at 8.5x 2022e EV/adj. EBITA, which is 48% below peers (ATEA, Dustin, Bechtle and Cancom), although we expect Proact to deliver sales (7%) and EBITA (11%) CAGRs in line with peers (2021-24e). Läs mer på Introduce
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