Semcon - Sequential recovery set to continue in Q2e
Squeed added to our estimates Proposes a dividend of SEK 3 per share Accelerates its climate action agenda Facing easier comps in Q2 following the 2020 restructuring COVID-19 weighed heavily on the European business climate from Q2 2020, and Semcon acted quickly with a restructuring programme that affected 170 employees, mainly in the EDS business area with automotive exposure. Revenues for the group were down 16% y-o-y (17% organically). For Q2e, we expect the business climate’s sequential recovery to continue in tandem with the gradual easing of COVID-19 restrictions, albeit at a slightly slower pace than we previously thought. For Q2e, we expect sales growth of 12%, of which 9.
5% is organic. We expect an EBIT margin of 9. 3% for the quarter, down from 9.
9% last year. Our thought here is that Swedish companies, including Semcon, were swiftly compensated by state grants last year, boosting the firm’s 2020 EBIT margin. The board has also proposed a dividend of SEK 3 per share for 2020.
Squeed behind estimate revisions, ‘22e EBIT up 6. 7% Semcon has acquired Swedish IT company Squeed AB, which had a turnover in 2020 of SEK 105m with an EBIT margin of 13%. The acquisition will be consolidated from 1 May and will be paid for with SEK 56m in cash and SEK 5m in shares (number of own shares held will be decreased).
In addition, earn-outs of up to SEK 39m can be paid out if certain criteria for operating profit are met for ’21-’23. For the core business, we have made slight downward revisions following a slower than initially expected re-opening plan. In total, this results in sales and EBIT revisions for ‘22e of 5.
1% and 6. 7%, respectively. We raise our fair value range to SEK 111-162 (100-148) We make positive revisions to our fair value range following the acquisition of Squeed.
It now yields SEK 111-162 (100-148), which is 5%-35% below key peers. Semcon also made a statement concerning its climate action agenda by joining the Exponential Roadmap Initiative,.