INVISIO - Strong Q4 forecast, M&A now included in ’21e
Expect another strong Q4, ABGSC EBIT SEK 72m Inclusion of Racal and U. S. MC news drive estimates Raise DCF fair value to SEK 125-305 (91-240) ABGSCe Q4’20 EBIT SEK 72m, +8% vs. consensus We forecast another strong Q4 performance from Invisio, with revenues of SEK 205m, ~7% above consensus, for y-o-y growth of 2.
0%. We think this will be driven by end-of-year small order intake as well as by Invisio delivering the majority of the SEK 44m order from a US client. Note that the order book stood at SEK 183m at the end of Q3’20.
We expect a strong Q4’20e gross margin of 63%, as there has been no material order featuring third-party components, which has a negative effect on margins. We factor in opex of SEK 57m, featuring some non-recurring costs associated with the acquisition of Racal Acoustics. Ultimately, we arrive at EBIT of SEK 72m, ~8% above cons.
, for a margin of 35. 0%. Several factors drive estimate changes We have made slight adjustments to our estimates following non-recurring M&A costs, lowering ’20e sales by 1.
6% and EBIT by 4. 0%. Following the recent news regarding the large US Marine Corps procurement (which we think has been delayed, and not lost, due to the US election and potential changes to the USMC’s upper echelon), we lower our ’21e-’22e sales by 9.
2-8. 2% and EBIT by 14. 9-12.
0%. We are also now including the acquisition of Racal Acoustics in our estimates, and factor in a ‘21e sales contribution of SEK 90m and EBIT of SEK 9m for a muted EBIT margin of ~10%. We do, however, see room for margin expansion over time as synergies are realised and Racal shifts part of its sales to direct channels.
In the long term, we like the acquisition of Racal given its complementary product portfolio and customer base. See page 3 for detailed estimate changes, and pages 4-5 for Racal details. Raise DCF fair value to SEK 125-305 per share Following our long-term estimate changes, where we raise our growth assumptions following the inclusion of Racal, we.
