GARO - Strong end to 2020, driven by EV chargers
Adj. EBIT of SEK 50m (+2% vs. ABGSCe, +5% cons. ) We raise adj.
EBIT by 3-2% for ’21e-’22e Trading at 40x EV/EBIT ’22e, div. proposal of 4. 75 (0) A report that bodes well for the 2021 outlook GARO delivered a strong Q4 report with sales of SEK 306m, up ~10% y-o-y (~10% org, ~1% M&A, 0% FX).
Group EBIT amounted to SEK 50m (+2% vs. ABGSCe, +5% vs. FactSet cons.
), on a record margin of 16. 2% (12. 9%).
On a divisional basis, the Temporary Electricity division showed a firm growth pattern (4% y-o-y), driven by renovation projects. The solid E-mobility division growth (39%), was matched by an increased interest in the private sector (AC chargers). According to management, the E-mobility development was assessed by the number of wall boxes delivered during the quarter.
On the negative side, GARO’s Project Business (-2%) and Temporary Power (-14%) divisions have shown negative growth as there was still lower activity in the construction market. Finally, operating cash flow amounted to SEK 83m (SEK 67m), attributable to higher earnings combined with lower tied-up working capital compared with the previous year. E-mobility incorporation to take place, EBIT up 3-2% ’21e-’22e Management expects the incorporation of the E-mobility division to materialise during 2021, with the aim to further develop and strengthen the EV charger segment.
We expect GARO to continually deliver higher EV charger volumes across all markets, which should contribute to a favourable price mix. However, with the 2020 results being in line with our expectations, we make only minor estimate changes, raising sales by 1% and EBIT by 3-2% for ’21e-’22e, for a ’20-’23e EBIT CAGR of 18%. Charged up for the megatrend, trading at 40x ’22e EV/EBIT On the back of strong reported figures, GARO aims to pay an ordinary dividend of SEK 4.
75 per share (0. 00), corresponding to 50% of FY’20 EPS. The share is up 100% LTM, trading at 40x ’22e EV/EBIT (5y historical avg.
~25x). All in all, we still think that GAR.
