Semcon: Demand still solid despite macro uncertainty - ABG

Q2 sales growth of 12.4% (2.8% organic) Sales estimates up ~1%, albeit with a lower EBIT margin New fair value range of SEK 112-162 (115-164) Q2: Price hikes drive organic growth development
Semcon reported Q2 net sales of SEK 500m (+12.4% y-o-y of which 2.8% organic), 2% above ABGSCe. The deviation was driven by Product Information (PI), where the new project with Volvo Cars was almost able to bridge the decrease in business volume with a UK automotive customer, as communicated earlier. Organic sales fell by 1.7% for PI and total sales for the business area were 4% above ABGSCe. Engineering & Digital Solutions (EDS) reported net sales growth of 18.2% (6% organic), 1% above ABGSCe. The organic growth was mainly driven by price hikes towards customers. EBIT was SEK 35.3m (39.7m) and adj. EBIT was SEK 42.5m (39.7m), where the IAC costs of SEK 7.2m were related to preparation work for the separate listing of PI. Adj. EBIT was 3% below ABGSCe, mainly from a normalisation in profitability within PI. We think it was a solid report that suggests demand is holding up despite higher prices towards customers, while management indicates that further price hikes will be performed in H2.