GARO - Continues to improve; strong set of numbers
Q1’21 EBIT of SEK 46m (+35% vs. ABGSCe) Estimates should come up roughly 7-5% ’21-‘23e Trading at c. 39x ’21e EV/EBIT, 1-2% FCF yields ’21-’23e Q1’21 results Total group sales came in at SEK 291m (+6% vs. ABGSCe at SEK 274m), up 17% y-o-y, of which 15% organically (ABGSCe at c.
10. 7%). Total group EBIT came in at SEK 46m (+35% vs.
ABGSCe at SEK 34m), for a stellar margin of 15. 8% (7. 6% in Q1’20), well above ABGSCe at 12.
4%. Segment-wise: sales within Temporary Power grew by 20% y-o-y and came in 22% above our expectations, E-mobility growth continues, up 62% y-o-y and 17% ahead of ABGSCe, while the remining two segments came in slightly in-line with Q1’20 and our expectations. Estimate changes and outlook On the back of the strong report, EBIT estimates are likely to come up by around 8-4% in ’21-‘23e.
Regarding the outlook, GARO successfully managed to secure supplies in the first quarter, but the limited access to components and raw materials might impact the production in the following quarters. However, the company sees strong demand within charging infrastructure across all markets. Demand for construction and renovation-related products in the Swedish market is expected to remain stable in the following quarters.
Final thoughts and conf call details The share is down c. 5% L3M and is currently trading (pre-Q1 report) at c. 39x ‘21e EV/EBIT, c.
30% above its 3yr average but c. 16% below its ’20 level. The share is down c.
1% today but we expect it to trade up high single digits for the day. More information expected during conference call at 15:00 CET today. Dial-in Sweden: 010 884 80 16; All other locations: + 44 20 3936 2999; Participant Access Code: 35 15 15.
A live stream can be followed at: http://corporate. garo. se/en/media/press-archive.
