BTS Group - Ahead of the curve

Strong Q1, in particular driven by North America We raise’21-‘23e EBITA by 9-4% 26x-19x ’21-‘23e EV/EBITA Virtual solutions continue to gain traction BTS delivered a strong Q1, in accordance with its pre-announced results. Like in previous crises, the demand for BTS’ solutions has been strong in the wake of COVID-19, as companies are looking to implement new strategies. EBITA was SEK 42m (vs. the pre-announced figure of SEK 41m), and much higher than the SEK 12m in Q1’20.

The EBITA margin improved to 10.7% (3.2%). The strong results stemmed from good traction of its virtual solutions, which essentially accounted for all deliveries in North America in Q1, according to the company. FX adj.

sales grew 17% y-o-y and +12% vs. Q1’19 (of which 8% was organic). With adj.

EBITA growth of 121% y-o-y, North America performed particularly well (13.8% EBITA margin), but Other markets also had promising results. Europe’s recovery was slightly slower, but this region should improve from now, we believe. ‘21e EBITA margin of 13.4% vs.

13.2% in 2019 With improved confidence after the Q1 report, we continue to expect all BTS’ business units to recover well in 2021. We forecast 2021 EBITA similar to that seen in 2019, which is in line with guidance. Following the report, we raise ’21-’23 sales estimates by 3%, and EBITA estimates by 9-4%.

For ‘21, we expect an EBITA margin of 13.4% (vs. 6.2% in ’20 and 13.2% in ’19). Strong foundation for growth BTS’ forward-leaning response to the crisis has so far proven to be right.

We believe that its investments in 2020 have enabled the company to win market share, and we expect this to continue. Furthermore, we like the fact that it has sharpened its focus on customer segments that are showing rapid growth - the tech and pharma sector, for example. The market BTS operates in is still highly fragmented and the company only has ~1% market share, which we argue allows it to pursue both organic and inorganic opportunities.

On our new esti....