Studsvik will report its Q4 numbers to the market on 10 February at 07:30 CET, and will subsequently hold a conference call at 11:00 CET. Ahead of the report, the company will enjoy some tailwinds from a renegotiated license agreement within the Waste Management business area. The renegotiation will have a positive effect on EBIT of SEK 20m and a FCF effect of SEK 30m. Since the Waste Management business has experienced a tough few years, we see this renegotiated agreement as a welcome change, and think it might be enough for Studsvik to continue pursuing the opportunities in this market rather than making a strategic decision to discontinue the business area. Another positive event is that the EU has decided to include nuclear in its Taxonomy as a transitory solution for energy supply, and it is looking increasingly likely that it will stick around for another couple of decades.
Only minor adjustments to ’22e-’23e estimates
Apart from the positive effects of the renegotiated license agreement, we only make minor estimate revisions ahead of the Q4 report. The changes for ‘22e-‘23e are less than 1% and stem from a slightly more positive long-term view of the Waste Management business. We will keep an eye on the continued ramp-up in the Fuel & Material business area and how that will translate to the operating margin. We are positive regarding profitability as utilisation increases, but management has not stated any specific target. It will also be interesting to see whether the new Scandpower CEO has been able to reinforce the business area. Logically, a market-leading software business should be able to have higher margins and a transition towards SaaS (from license agreements) would make strategic sense.
’22e P/E of 12.6x, ~5% FCF-yield
The share is currently trading at a ’22e P/E of 12.5x, EV/EBIT of 10
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