JLT Mobile Computers - Below our forecasts, but improvements q-o-q
Order book build-up hurt sales in Q4 Positive sales momentum, despite a miss vs. our forecast ’21e EV/EBIT of 10x, 13% EBIT CAGR in ’21e-’23e Q4’20 sales impacted by a lower order book conversion Sales were below our expectations (SEK 29m vs. SEK 40. 8m ABGSCe), although mainly owing to a higher book-to-bill ratio than expected (115% vs.
85% in Q4’19). The organic y-o-y growth was -7%, a sequential improvement vs. -19% in Q3’20.
Although sales were below our expectations, the order intake increased 18% y-o-y and the backlog currently sits at SEK 16. 8m; an increase of 41% vs. Q4’19 and up 34% q-o-q.
Opex decreased less than sales (-17% y-o-y), partly because JLT paid out SEK 0. 9m in pent-up personnel bonuses that had been reserved in H1’20. As such, EBIT was SEK -0.
4m (vs. SEK 2. 9m in Q4’19).
Our forecast was SEK 4. 7m, with the deviation due to the sales miss. We cut our 2021-2022e EBIT by 11% We argue that the sequential improvements suggest that things are moving in the right direction.
However, the weaker-than-expected results means we lower our 2021-2022e sales by 5-7%, and 2021-2022e EBIT by 11%. In light of the easy comps, we estimate JLT will report 18% sales growth in 2021. That said, we do not think that JLT can reach the same sales level as in 2019, as demand has not fully recovered.
However, costs should remain low and we estimate that this will result in an improved EBIT to SEK 11m, up from SEK 2m in 2020, supported by an improved gross margin (amid beneficial FX movements). Enhanced services offering In conjunction with the Q4 report, JLT sent out a press release, stating that it will start a new software development subsidiary in order to enhance its serviced-based offering. JLT’s service-related revenues have developed well lately (+15% y-o-y in 2020), and we see several benefits with improving these further.
Not only do they add recurring sales, they are also margin-accretive; thus we like the initiative. While we see limited impact from t.