Projektengagemang - Drawing a sustainable future
A leading engineering and architecture consultancy firm 13% EBITA and 28% EPS CAGR ’20-‘23e DCF valuation range of SEK 22-42 90% real estate exposure with positive market signals Projektengagemang (PE) is one of the leading Swedish engineering and architecture consultancy firms with around 1,000 employees that are spread out on 25 different locations across Sweden. The company has roughly 90% exposure to the real estate market with its multifunctional expertise from its three divisions: Architecture & Management, Civil Engineering & Infrastructure and Systems. PE is exposed towards megatrends such as urbanization, digitalization and climate change, or more specifically, how to build and refurbish in a way that decreases the carbon footprint of buildings. The targeted end market has been challenging the last couple of years after its peak in ’16-’17 but during ’20 we saw several signs of a more positive end-market environment and our belief is that market conditions are improving again.
The company targets annual sales growth of 15% (inc. M&A) and an EBITA margin exceeding 8%. Large organisational changes performed in ’19-‘20 The period ’9-’20 has been turbulent for PE, with a CEO resignation, restructuring programmes and maybe the most important step, to merge 20 brands into 1 solitary brand for the whole company.
PE also had to deal with a pandemic after all the changes performed in ’19 but rounded off the year with the positive news of hiring a permanent CEO who has top level experience from Sweco. Despite this, PE has maintained its brand quite well. We think the company is through its rough patch and has the potential to grow profitably in the coming years.
We forecast 5% sales, 13% EBITA and 28% EPS CAGR for ’20-‘23e and see scalability from increased utilization, lower D&A and financial costs. Valuation gap to peers, indicative peer range SEK 33-43 We use a sensitivity analysis on our DCF assumptions to arrive at a fair value range of SEK 22-42. In ....