Semcon - Slower recovery offset by higher margins
Pre-announced Q4 EBIT of SEK 49m (49m) We raise our mid-term EBIT margin assumption Fair value range of SEK 79-134 Q4: Profitability a step ahead of ABGSCe On 21 January, Semcon pre-announced its Q4 sales of SEK 401m (489m) and EBIT of SEK 49m (49m); the latter was 36% above consensus and 41% above ABGSCe. The deviation towards ABGSCe was partly driven by gains in finished projects of SEK 9m (3m), and partly by higher-than-expected margins. Semcon did not disclose numbers on the business area level. We assume the remaining deviation of SEK 5m on EBIT was split between the business areas, indicating a continued strong EBIT margin in Product Information (PI) of 15.
5% (10. 6%), alongside 8% (10%) in Engineering & Digital Services (EDS). The full report will be released 10 February at 08:00 CET and we will have a better picture then.
Positive revisions despite slightly slower recovery We make slight adjustments to our forecast as a result of the pre-announced earnings, where we forecast a slightly slower recovery following the ongoing COVID-19 pandemic. However, the negative impact is offset by higher assumed EBIT margins in both business areas. In total, we raise our ‘21e-22e EBIT by 4.
6%-3%. Management changes within EDS Two other noteworthy events have occurred since our last update. First, as communicated on 22 January, current CEO Markus Granlund replaces Daniel Rundgren as head of EDS in order to fuel growth even further.
Markus will remain as CEO, and Daniel will remain within EDS, focusing more on growth initiatives and M&A. It remains to be seen if this is a temporary change, or if Markus will take on both roles in future. Secondly, PI won an assignment with UK-based commute company Stagecoach, where Semcon will aid with staff training (new routines etc.
) and the servicing of the new Citylink trams in South Yorkshire. The assignment follows Semcon’s plan to increase PI’s exposure towards the railroad industry.
