Addtech - Quarters of organic decline are behind us
Q4 EBITA -5% vs. consensus ’21/’22-’22/’23e EBITA and sales down 1% 27x NTM EV/EBITA Organic growth worse than expected, at -10% Addtech’s Q4’20/21 was on the soft side, primarily as organic growth was much worse than we expected. Sales were SEK 2,927m (-6% vs. ABGSCe SEK 3,116m and -5% vs.
Infront consensus SEK 3,092m), and organic growth was -10% (ABGSCe -2%), with the contribution from M&A and FX at 9% and -3%, respectively. Automation was the weakest segment, 14% below ABGSCe, due to reduced project deliveries this quarter. EBITA was down 18% y-o-y, at SEK 335m (-6% vs.
ABGSCe and -5% vs. consensus) on a margin of 11.4% (ABGSCe 11.5%, consensus 11.4%). Note that the comparable quarter had a positive one-off of SEK 50m, and Q4’20/21 had negative item of SEK 15m.
Therefore, adj. EBITA was only down 2% y-o-y and the adj. margin improved 20bp.
All business areas had a positive book-to-bill at the end of March, which is supportive of a sequential improvement into Q1. More exposure to component price increases than peers We leave our estimates relatively unchanged, only lowering sales by 1% and EBITA by 2% for ‘21/22-‘22/23e. The larger 4-5% decrease on EBIT comes from higher D&A assumptions, now in line with the ‘20/’21e run-rate.
We are less concerned about demand over the coming quarters. However, component shortages and price hikes could prove to be more of an issue, although visibility is low at the moment. Compared to peers, Addtech is more of a distributor and has the lowest gross margins, which means it should be relatively more exposed to increased input costs.
Valued in line with peer group on lower M&A activity The share has been strong, up 23% YTD. Currently, the share is trading at 27x NTM EV/EBITA, which is in line with its core peers, also at 27x, but well above its own historical average. However, M&A activity has been on the low side, with ~5% sales contribution into ‘21/’22e (Lifco +9% and Lagercrantz +14%)..