Semcon reported Q4 sales growth of 19% y-o-y, of which 8% was organic. We argue that it was a step in the right direction even though the comps from Q4’20 were easy. The company managed to show positive net recruitment adj. for the acquisition of Tedsys in a market that still has high turnover rates among employees. We also note that Semcon has a lot of job openings in a broad variety of areas currently, and we think it can continue this momentum into 2022. Furthermore, the net promotor score among current employees reached an all-time high in November, and having a strong culture will be of importance in the job market because of the relative lack of engineers in Sweden. Adj. EBIT was SEK 56.2m (41.6m), which is impressive given that the company recognized SEK 12.9m (4.5m) of group costs in Q4. The report was in line with ABGSCe on sales and organic growth but 12% ahead on adj. EBIT. Semcon proposed a dividend of SEK 4.0 (3.0) per share.
Higher adj. EBIT margin offset by cost for public listing
We only make minor adjustments to our sales estimates, lowering them by ~1% for ‘22e-‘23e as a result of slightly slower growth in Squeed than expected. We raise our adj. EBIT margin assumptions following the strong Q4 report. For ‘22e adj. EBIT this results in a raise of ~3%, but it is offset by higher assumed group costs in conjunction with the public listing of the business area Product Information that the board has decided to go through with. We include SEK 20m of extra costs in this regard, which means our reported EBIT estimate for ‘22e is down ~5%.
Fair value range of SEK 116-167 (115-165)
We update our fair value range to SEK 116-167 based on a blend of P/E and EV/EBIT in relation to key peers. Our range implies Semcon trading 0-30% below key peers. It is currently trading at a ‘22e P/E of 13.6x, EV/EBIT
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