Allgon
Allgon - Solid finish to a transformative year (ABG Sundal Collier)
2020-02-20 19:32
Sales +3.6% vs. ABGSCe, EBITDA -14.1% vs. ABGSCe
Slightly negative EBIT revisions as personnel expands
EV/EBIT 9.5x-5.3x & FCF yield 5.4%-14.7% for ‘20e-‘22e
Q4’19: Sales of SEK 145m alongside EBITDA of SEK 20mAllgon reported its Q4’19 figures today, which revealed a solid finish to a transformative year in which Allgon has established a new level of profitability and growth following the acquisition of Tele Radio. Reported net sales were SEK 145m, +3.6% vs. ABGSCe, corresponding to a total y-o-y growth of 11.2% and an estimated organic growth of 10.1%. The Industrial radio control segment reported net sales of SEK 119, corresponding to 82.2% of total revenues, and a y-o-y growth of 8.3%, alongside a strong EBITDA margin of 22.7%. On a group level, profitability was lower due to a few items, which caused a slight miss versus our EBITDA estimate. The reported gross margin was 71.5%, negatively affected by -1.5% due to a somewhat less favourable product mix compared to the rest of 2019. Additionally, personnel costs came in at SEK 59m, compared to our estimate of SEK 54m, as Allgon is expanding its personnel base to prepare for enhanced growth. Salaries in Germany were also higher due to year-end bonuses. Consequently, the reported EBITDA of SEK 20m was 14.1% below our estimate.
Focus on growth sees expanding personnel expenses
Allgon plans to continue increasing Tele Radio’s personnel base, due to the initiated geographical expansion, but also to increase growth in existing markets. As such, we raise our ‘20 personnel expense estimate from SEK 222m to SEK 240m, which causes negative EBIT revisions of -3.2% for ‘20e, despite our increased revenue estimate. We view this as a natural step for Allgon in achieving above market level growth.
Updated DCF range of SEK 6-19 (6-18), supported by SOTP
Based on our updated estimates and the current share price, Allgon is trading at an EV/EBIT of 9.5x-5.3x for ‘20e-‘21e, which is ~37% below our peer group median EV/EBIT for the same per
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