Elanders - Positive earnings revisions continue
EBITA 18% better than ABGSCe EBIT up 6-2% ’21e-’23e 12x EV/EBIT ’22e with 13% EBIT CAGR ’20-’23e Organic growth of 15% in Q1, EBITA up 77% y-o-y Elanders reported solid numbers across the board, combined with good cost control. This led to a group EBITA of SEK 142m, 77% y-o-y and 18% better than we estimated. The beat was mainly due to solid cost control and led to EBITA margins of 5. 2% (2.
6%). Sales was SEK 2,734m, with organic growth of 15% y-o-y, 5% better than ABGSCe. A highlight was the strong performance of fashion and lifestyle in Supply Chain Solutions, which grew by 28% y-o-y, largely due to a shift to ecommerce from traditional retail.
To meet the increasing ecommerce demand, Elanders is opening a new facility in H2’21 that should support further growth in this vertical. Operational cash flow was on the low side at SEK 119m (300m), mainly due to increasing working capital levels. EBIT up on Q1 beat and higher margin assumptions We raise EBIT by 6-2% for ’21e-’23e, partly due to the strong Q1’21 that has an isolated effect of +3% on ’21e, and also due to our higher margin assumptions.
We now expect a FY’21 EBITA margin of 6. 7%, up 30bp from 6. 4% previously.
Management mentioned that it saw a limited impact from the semiconductor shortages in Q1, but has no current indications that there will be a noteworthy negative impact during the rest of the year. We believe that visibility is relatively low when dealing with automotive manufacturers, however (Automotive is c. 20% of sales).
Estimate revisions have led to limited multiple expansion Looking at our ’22e figures, Elanders trades at 12x EV/EBIT, ~20% below our peer group, while offering a 13% adj. EBIT CAGR for ’20-’23e (4pp above peers) and an 8% lease adj. FCF yield.
Management mentioned that it intends to accelerate its M&A agenda, which the 0. 4x lease adj. ND/EBITDA supports.
Worth noting is that ND/EBITDA is currently at about the same level as before the acquisition of LGI in 2016, which d.
