UK and West (Netherlands & Germany) behind the miss
Operational challenges continue
8.3x NTM EV/EBITA as of Friday close (5-year avg. 7.4x)Pre-announcing Q4’19 figures 16% below ABGSCe
Proact pre-announced this morning its Q4’19 figures with sales of SEK 991m (-3% vs ABGSC 1,023m), organic growth -3% (vs ABGSC -2%), adj. EBITA SEK 49m (-16% vs ABGSC 58m and -16% y-o-y) and adj. EBITA margin 4.9% (vs ABGSC 5.7%). Main weakness coming from UK and region West (Germany and Netherlands). UK seems to be the negative delta from previous quarters, as West started to be weak already in Q2’19. Nordics holding up well. The full report is expected on 6 Feb.
Issue seems to lie in the margin
The adj. EBITA miss seems to be a cost issue driving down the margin. We think this is a result of either lower margin in System sales (could explain UK and Germany) or lower Service sales (Netherlands primary reason according to us). Cloud orders in the quarter amounted to SEK 97m, relatively in line with our estimate, but down y-o-y vs tough comps (176m in Q4’18).
Valuation a bit above 5-year average at 8.3x EV/EBITA
As of Friday close, the share traded at a NTM EV/EBITA of 8.3x, a bit above its 5-year historical average of 7.4x. We expect the share to underperform the market today.
- Läs mer på Introduce