Lagercrantz - Valuation well below peers on higher estimates
20% EBITA beat vs. cons, largely driven by TecSec EBITA up 10% ‘21/22e, up 9% ‘22/23-‘23/24e 24x EV/EBITA ‘22/23e, 13% lower than peers Impressing volumes and profitability Lagercrantz continues to impress, both on sales and margins, with sales growing 33% y-o-y (organically +18% vs. ABGSCe at +11%) and an EBITA margin of 16. 3% (ABGSCe at 15.
4%) in Q1. EBITA was SEK 212m, up 71% y-o-y and 17% better than ABGSCe (20% better than FactSet cons). TecSec, the new segment, was particularly impressive, up 60% q-o-q and beating ABGSCe by 60% on sales and by 93% on EBITA.
The segments Electrify and International also contributed to beating estimates, with Elpress in Electrify performing very well, and International experiencing a stronger market combined with the implemented restructuring that bolstered margins for the segment. Lagercrantz has reported some negative effects of shortages and rising costs in the quarter, but it has managed to pass higher prices on to its customers. Handling costs well We raise EBITA by 10% for ‘21/22e (organic growth +4%, margin assumptions +5% and M&A & FX +1%) and by 9% for ’22/23-‘23/24e.
Or changes primarily stem from higher estimates in TecSec and Electrify. Lagercrantz management says that the supply chain constitutes some future uncertainly, but we expect the company to be able to handle the situation relatively well and only assume a minor effect in H2. We previously expected SG&A to have ramped up during Q1, putting pressure on margins.
This has not been the case, and we push the ramp-up to mid H2, assuming that it should occur at a slower pace. Valuation is increasingly lower than that of peers Lagercrantz is trading at 24x EV/EBITA for ‘22/23e, valued 13% lower than peers (Indutrade, Lifco, Addtech, Sdiptech) on our updated estimates for ‘22/23e, which is lower than usual (5Y avg. of 3% lower).
Lagercrantz has executed on M&A exceptionally well (+15% M&A contribution in ‘21/22e), and as a result, the share has not kept up.
