Sales were SEK 28.1m (-7% vs. ABGSCe SEK 30.2m), up 16% y-o-y. EBIT was SEK 7.6m (-12% vs. ABGSCe SEK 8.6m), for a margin of 27.0% (ABGSCe 28.6%). Net profit was SEK 7.9m (-16% vs. ABGSCe SEK 9.4m). The first volumes from the new Scania foundry in Sweden came in the quarter (no exact figures given), and this production will ramp up during 2022 and beyond to ~1m engine equivalents at full run-rate. However, no volumes were seen from the new FAW installation due to lockdowns in China. The company managed to keep a smaller opex base than we had expected, however the slightly lower sales than our expectations also affected margins negatively (due to the natural operating leverage of the business model).
Estimate changes and outlook
The isolated Q1 figures would imply negative EBIT estimate revisions of 2% for ’22e-’24e. However, outlook for series production remains positive, as volumes from new system installations (installed in ’21) ramp up. Also, there continues to be a backlog of demand among customers that can be realised once semiconductor availability improves.
Final thoughts and valuation
All in all, the report was a solid start to the year, although somewhat below our expectations. Management reiterated that it expects to reach the 4.0m engine equivalent milestone at some point during 2022 (we expect in Q3), which we find reassuring. On pre-Q1 estimates, the share trades at 22x ’22e EV/EBIT, offering 5-7% dividend yield for ’22e-’24e.
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