Opus Group
Opus Group - FX headwinds impact 2018e net profit (ABG Sundal Collier)

2019-01-22 08:25
Slight revision of estimates for upcoming years
Argentine peso causes FX headwinds
Low valuation compared to historical levels
Strong y-o-y growth, pressure from Latin America
We expect Q4 sales of SEK 644.3m (up 29.6% y-o-y) and EBITDA of SEK 125.9m, giving an EBITDA margin of 19.5%. Sales growth is being driven mainly by the Vehicle Inspection segment in the US and Asia. In light of the company’s recent acquisitions, combined with a higher rate of Equipment as a Service rollouts, we estimate y-o-y growth of 47.5% for the segment. The Argentine peso continued to fall in Q4’18, causing estimated negative sales FX effects of SEK 5.9m during the quarter for the Vehicle Inspection Latin America segment.

Q4’18e Swedish market share decline of 4.6% y-o-y
Since our last update in November 2018, Opus’s market share in Sweden has continued to decline. Statistics from the Swedish Transport Agency (Transportstyrelsen) indicate that Opus’s market share was 23.8% in December 2018, which is the lowest figure we have seen since the statistics became available online. This has caused us to lower our estimates for the Vehicle Inspection segment in Europe (which mainly consists of Sweden). We now estimate Q4 sales of SEK 156.2m for the segment, representing negative y-o-y growth of 4.0%, and EBITDA of SEK 19.5m, giving an EBITDA margin of 12.5%.

Low valuation compared to historical NTM EV/EBITDA
Opus’s valuation has continued to decline in 2018. At the current share price, the stock is trading at an EV/EBITDA of 5.1x and 4.5x for ’19e and ’20e, respectively, based on our estimates. Compared with the five-year average NTM EV/EBITDA of 7.8x, the ’19e multiple is 34.6% lower.


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