Estimate sales of SEK 153m, organic y-o-y growth 9.8%...

…along with EBITDA of SEK 29m, for a margin of 19.1%

DCF scenario value range of SEK 7-19 per share

ABGSC Q2’19 expectations
Allgon is set to report its Q2’19 figures on 29 August. We expect a strong performance as Allgon’s focus on the segment for industrial radio control solutions continues to pay off. We estimate sales of SEK 153m, which corresponds to total y-o-y growth of 168.4%. However, when we adjust for currency effects and acquisitions, we arrive at an organic growth rate of approximately 9.8% for the group. We believe that this will yield an EBITDA of SEK 29m, corresponding to an EBITDA margin of 19.1%. The group’s performance is largely driven by the segment for industrial radio control solutions, and we estimate that the segment will account for roughly 80.1% of total sales in Q2’19, with sales of SEK 122m and an EBITDA margin of 24.0%.

Estimate changes and outlook
We note that the industrial sector has had a mixed Q2’19, a trend which one might expect to also affect Allgon. However, we do not think Allgon has experienced a slowdown in demand as of yet. Furthermore, we believe that the nature of Allgon’s products – for example enhancing the safety of machine operators – makes it resilient to short-term fluctuations in the material handling industry. Nevertheless, we fine-tune our forecasts in regards to sales, COGS and net financials on an annual basis, causing minor changes for ‘19e, but more substantial increases in EPS of 11.5% and 7.6% for ‘20e-‘21e, respectively.

6.8x-4.4x EV/EBITDA for ’19e-’21e
On the back of our estimate changes, we also adjust our three DCF scenarios, which now indicate a valuation range of SEK 7-19 per share. Details in regards to our DCF scenarios can be found on page 7. In addition, we find that at the current share price, and based on our updated estimates, Allgon is trading at an EV/EBITDA of 6.8x for ‘19e. This is approximately 31% below the average EV/EBITDA of 9.9x f
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