We raise our EBITA estimates for ’21-’23 by 12.3-3.4% on the back of the Q2’21 report and due to COVID-19 still creating temporary margin tailwinds due to less business travel and slower recruiting than normal. We estimate that Q3’21e will continue to see elevated margins due to the abforementioned factors as well as a favourable seasonal effect in Sweden in terms of personnel costs. Looking at ‘22e and ‘23e, we forecast slightly lower margins (27-28% EBITA margins) due to further normalisation of the COVID-19 impact.
Valuation ~10% above peer group
In terms of valuation, Vitec is trading at a ‘21e-‘23e EV/EBITA of 31-29x, based on the current share price and our updated estimates but excluding any future M&A. This is approximately 10% above the median of our peer group, which consists of relevant roll-up peers. Given the recurring nature of Vitec’s revenues, its above-peer margins and strong capital allocation track record, we would argue that this could be justified.
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