Lagercrantz - Extrapolating higher margins
Adj. EBITA was 4% better then ABGSCe and cons We raise ‘21/22e EBITA 6% on M&A and higher margins No longer valued at a discount to peer group Impressive margins, once again Lagercrantz reported a solid set of numbers once again, mainly on the back of impressive margins. However, sales were slightly disappointing at SEK 1,118m, -4% vs. ABGSCe and Infront consensus.
Organic growth was -3% as the pandemic is still affecting business activity. On the other hand, the pandemic is driving continued marketing and travel savings, which supported the stellar EBITA margins of 17. 2% (13.
7%). All segments except Communications contributed to the 7% better than ABGSCe EBITA, coming in at SEK 192m. Niche products was the main driver of the beat, coming in 12% better than ABGSCe on sales and 17% on EBITA.
However, earnings were slightly boosted by a non-recurring item of SEK 6m relating to an earn-out. Hence, adj. EBITA was SEK 186m for a margin of 16.
6%, reducing the real earnings beat to 4% vs. ABGSCe and cons. Estimates up on M&A and higher margin assumptions We increase our ’21/22e-‘22/23e EBITA by 6-5%, mainly on increased margin assumptions and recent acquisitions, along with updated FX.
The rather large acquisition of CW Lundberg contributes c. 4%. However, we expect a downtick in margins as costs gradually increase over the coming quarters, but EBITA growth should continue progressing upwards with organic growth of 8% in FY ‘21/22e.
We forecast adj. EBITA margins of 14. 9-15.
4% for FY ’21/22-‘23/24e, and a 10% adj. EBITA CAGR for ’20/21e-‘23/24e. We have yet to implement the new segment structure and will return with new estimates in due time to reflect the change in reporting.
Valued in line with peers on updated estimates The share is up 23% over the last three months, trading at 26x NTM EV/EBITA on our updated numbers, which is in line with the peer average (+12% vs. Lifco, -4% vs. Indutrade, -9% vs.
Addtech). In 2020, Lagercrantz’s share has seen a significan.
