INVISIO - COVID-19 pressure Q4, H2’21e to see recovery
Q4 EBIT SEK 40m, -43. 7% vs. ABGSCe, -40. 7% vs.
cons H1’21e likely pressured by COVID, H2 to see recovery We maintain our DCF fair value range of SEK 125-305 COVID-19 order delays drove the estimate miss in Q4 Invisio delivered a Q4 report that was below expectations, driven by continued delays in order intake, lower-than-anticipated small order intake, and slightly higher non-recurring costs associated with the Racal acquisition than we had anticipated. Net sales were SEK 173m, -15. 5% vs.
ABGSCe and -9. 5% vs. consensus.
The gross margin of 59. 1% was 3. 9pp below our estimates, negatively affected by older products.
EBIT in Q4 was SEK 40m, -43. 7% vs. ABGSCe and -40.
7% vs. consensus. We could see a sharp recovery in H2’21e We think it likely that Invisio will continue to face headwinds in H1’21e, driven by COVID-19 preventing customers from conducting sufficient field tests and delaying administrative tasks.
We think this will cause further delays in sizeable customer orders and projects. However, we think that Invisio could be in for a sharp recovery in H2’21e. Management is already seeing a gradual recovery in the US, where the election is behind us and new decision makers are in place.
Additionally, an easing of travel restrictions in that country is gradually enabling Invisio’s sales force to visit customers once again. The small order intake has also begun to regain speed. As such, we expect a slow H1’21e: we factor in flat organic growth in Q1-Q2, which picks up considerably in Q3-Q4.
Our estimate changes in ’21e-’22e are driven by the weak Q4’20 report. We maintain our DCF fair value range The Q4’20 report does not change the long-term growth potential, in our view, and we maintain our DCF fair value range of SEK 125-305. As we have highlighted in previous reports, we think that the acquisition of Racal Acoustics will provide a new segment fueling growth over time, with potential margin expansion as direct sales are increased.
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