Ferroamp - Decent Q1 despite disruptions in PV market
Improved y-o-y, but below our expectations Outlook intact despite COVID and component shortages New fair value range of SEK 83-124 (86-128)/share Q1: sales +29% y-o-y, March stood out as strong Ferroamp delivered Q1 sales of SEK 21m (-27% vs. ABGSCe at SEK 29m), +29% y-o-y, and closed the quarter with a doubling of the order intake compared to Q1’20. The negative deviation from our estimate on sales stemmed from a somewhat slow start to the year, with the weather affecting market activity and there was a lack of components among the solar PV manufacturers and in the PV industry in general, which directly affected Ferroamp’s PV-related products. However, we saw signs of pent-up demand being released in the quarter, with March sales of SEK 11m.
EBIT came in at SEK -10m (vs. ABGSCe at SEK -9m), hurt by higher raw material and transport costs (SEK -4m). Finally, management highlights high underlying demand for its products and that it built inventory in Q1 as a safeguard for potential component and material shortages in the coming months, which we view as wise.
We lower ’21e sales by 5%; sales growth of 68% p. a. ’20-’25e We lower ’21e sales by 5% and ’22e-’23e by roughly 2-3% as a result of slightly lower ramp-up expectations.
EBIT comes down in tandem with the lower sales assumptions. We now forecast a total sales growth of ~68% p. a.
in ’20-’25e, and we still expect the company to see operational profitability in ’22. Overall, we reiterate our positive view on Ferroamp’s cutting-edge technology and argue that the strong order intake bodes well for the following quarters. Moreover, the solid outlook appears intact despite any disruption from component shortages affecting Ferroamp’s underlying markets.
Fair value range of SEK 83-124 (86-128) per share We lower our fair valuation range slightly to SEK 83-124 (86-128), based on our lower forecast assumptions. Our valuation is based on a range of 3. 0-4.
5x ’22e EV/sales exit multiples. The valuation is also cros.
