eWork - Poised for further growth

Strong recovery in sales (+7% y-o-y, +5% vs. ABGSCe) We raise our ‘21-‘23 EBIT forecasts by 4-2% Well-positioned for further growth, 14x ‘21e EV/EBIT Broad-based recovery continued in Q2 eWork continues to recover well after a soft 2020, as it managed to beat our sales and EBIT forecasts by 5% and 17%, respectively. Sales grew 7% y-o-y (vs. -11% in Q1), primarily driven by Sweden and Norway.

The recovery was also visible in the order intake and the number of consultants out in the field, which reported 25% and 13% y-o-y growth, respectively. Owing to the improved sales, EBIT grew 12% y-o-y to SEK 33m. Encouragingly, costs for its digital tools continues to decline, which makes us confident that these have culminated, and also paves the way for improved margins ahead.

Positive estimate revisions trend: ’21-‘23 EBIT ests. up 4-2% We argue that actors like eWork benefit well from the current environment, where IT consultants are seeing increased personnel turnover levels after low ratios in 2020. Based on this assessment, in combination with the fact that it has recently strengthened its product portfolio, we forecast continued strong growth in the coming quarters.

We raise our ’21-’23 sales estimates by 1% after the report, which drives 4-2% positive EBIT revisions for the same period. After a period with negative estimate revisions, we now note a recently positive trajectory. For 2021, we forecast 7% sales growth and 38% EBIT growth, which compares to the company’s guidance of “improved sales and profitability in 2021 vs.

2020”. New CEO as of December 2021 After being the helm of eWork since 2014, the current CEO Zoran Covic has recently resigned. However, as the main shareholders intend to propose Mr.

Covic as a board member, we find little cause for concern from this. In addition, the company has already found a replacement; Karin Schreil, previously Managing Partner for TietoEvry Sweden (i.e. highly relevant experience), has been appointed and will en....