Slightly positive estimate revisions

Newsflow picking up with M&A activity

Valuation continues to decrease

Slightly revised estimates for Q4e and ’19e
We expect Q4e sales of SEK 277.5m, corresponding to q-o-q growth of 6.1% and y-o-y growth of 12.5%. We anticipate EBIT of SEK 40.4m for the quarter, corresponding to a margin of 14.6%. We expect Q4e to be mainly driven by the acquisitions in the Health & Education segment, Vitec’s largest, with estimated Q4e sales of SEK 88.5m and EBIT of SEK 11.5m, corresponding to a margin of 13.0%. Furthermore, we have slightly revised our estimates for ’19e, with sales of SEK 1,077m and EBIT of SEK 160.4m, corresponding to a margin of 15%.

Increased news flow including M&A activity
Q4 saw increased newsflow compared with Q3, most notably related to the acquisition of Smart Visitor Systems AB and its products aimed at municipal leisure and cultural departments in Sweden and Norway. Furthermore, Vitec announced that the company has entered into an agreement with Collector Bank, with Vitec’s Capitex software initially being introduced on the Swedish market. Norway and Finland will follow shortly. Vitec also successfully completed a directed new share issue worth SEK 197.5m, which broadened the company’s institutional ownership base in Sweden.

Valuation continues to decrease
Vitec’s valuation has continued to decrease since our latest update, despite the increased sales and profitability in Q3. The share now trades at EV/EBIT 16.8x and 15.2x for ’19e and ’20e, respectively, which compares with the five year average NTM EV/EBIT of 17.6x. With a stronger balance sheet and lower leverage thanks to the completed directed new share issue, we expect Vitec to continue its high rate of strategic acquisitions during 2019.

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ABG Sundal Collier - Introduce.se