Christian Berner Tech Trade - Weaker than expected Q1, but some highlights
Q1 sales down 9% y-o-y, but EBITA up 72% y-o-y We lower ’21e EBITA by 13%, ’22e-’23e down by 3% 15x ‘21e EV/EBITA, c. 21% EBITA CAGR ’20-‘23e Q1: Limited sales due to lack of large projects CBTT’s Q1 report came in softer than we had expected. Group sales were SEK 160m (-13% vs ABGSCe), down 9% y-o-y. Adj.
EBITA came in at SEK 8m ( vs ABGSCe 15m), the adj. EBITA margin at 4. 9% (2.
6%) vs. ABGSCe at 7. 9%, and net profit was SEK 5m ( vs ABGSCe 9m).
The sizeable sales deviation was mainly driven by a lack of both large infrastructure projects in segment Material Technology and heating projects in segment Process & Environment due to pandemic-related restrictions. The first-mentioned segment’s volumes were affected the most, with sales declining 19% y-o-y but EBITA flat. Nevertheless, last year’s restructuring programme combined with a favourable product mix contributed to the group’s y-o-y margin improvement of 230bp.
Management wrote in the Q1 report that Covid-19 is still hurting operations but that demand among customers is improving, something we expect to accelerate as the vaccination roll-out picks up speed. Finally, we expect the margin to improve from the Q1 level driven by 1) last year’s restructuring programme, 2) the recent margin-accretive acquisition, 3) a diminishing effect from Covid-19, enabling CBTT to visit its customers. ’21e EBITA down 13%, otherwise small estimate changes We leave our sales and margin assumptions relatively intact, but lower our EBITA margins slightly in the Process & Environment segment for ’21e.
However, on the back of the sizeable sales deviation in Q1, we lower our sales estimates by 3% for ‘21e-‘23e and lower ‘21e EBITA by 13% and ‘22e-‘23e by 3%. Trading at 15x EV/EBITA ’21e, 8-10% ’21e-’23e FCF yields On our estimates, the stock is trading at ~15x EV/EBITA ’21e while offering FCF yields of 8-10% on ’21e-’23e. Lastly, because of our lower earnings estimates, we lower our fair valuation range slightly to SEK 28-48 (.
