Projektengagemang (PE) reported Q4 net sales of SEK 260m (287m), -9% y-o-y and in line with ABGSCe. PE’s main problem this year has been high employee turnover, which we have seen in many consultancy firms throughout 2021. With that in mind, it is important that the company focuses on its culture, and it seems to be doing just that. During the conference call, management mentioned that the ‘employee net promoter score’ (eNPS) improved from -28 to +8 in 2021. All three business segments still posted declining revenues y-o-y on fewer consultants, but Architecture & Management and Civil Engineering & Infrastructure both reported higher EBITA margins y-o-y. The EBITA margin for the group was lower still at 5.6% (6.7%), as Systems struggled and reported a negative EBITA for Q4. PE proposed a dividend of SEK 0.4 per share for 2021.
The market conditions are there, time to reap the benefits
We think there were some promising signs in the Q4 report, with improved profitability in two of the business areas and improving KPIs from both employees and customers. However, PE has still not been able to show positive net recruitments and we are adjusting our forecasts accordingly, cutting sales estimates by 3% for ‘22e with a small increase in anticipated EBITA margin due to the improved profitability demonstrated in Q4. We think the demand in the market is there and see PE returning to growth in 2022, with the improving eNPS as an important catalyst for returning to positive net recruitment.
‘22e P/E of 11x, 4.5% expected dividend yield
We have updated our DCF valuation range that yields a range of SEK 20-35. Projektengagemang is trading at a P/E of 11x for ‘22e with an expected dividend yield of 4.5%. It is below our key peers, but all of them also returned to growth in 2021.
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