Capacent Holding
Capacent - Challenging end to 2019 (ABG Sundal Collier)
2020-02-26 10:42
Good cost control, but sales -17% vs ABGSCe
Lower growth assumptions, margins should recover
Share trading at EV/EBIT of 9.5x for ’20e
Acquisition integrated, Iceland strengthens profitabilityCapacent reported net sales of SEK 72.4m (78.0m), corresponding to a decline of 7% y-o-y and -17% vs ABGSCe. We assess that organic sales were down more than 25% in the quarter, which highlights the challenging market conditions. This was especially evident for the management consulting business in Sweden, where we had higher expectations. On a positive note, reported EBIT was 35% above our estimates on good cost control (especially in Iceland which reported an EBIT margin above 10% in the quarter). The acquisition of RGP also seems to have been integrated well, with a positive contribution in the quarter. In fact, both Capasearch and Capacify contributed positively to EBIT in Q4, which bodes well for margin development going forward.
Tough market conditions hurts outlook, negative revisions
The growth story has taken a turn of late, with the recent slowdown in the market. In light of that, we make negative adjustments to our sales estimates (by 10-12% for ’20e-’21e). Even though Capacent showed good cost control in the quarter, we believe it will be hard to strengthen the margin as much as we previously anticipated in a weaker market. We still see a good possibility to strengthen the EBIT margin y-o-y, however. Our revised estimates see an EBIT margin of 4.8% (3.9%) for FY 2020, which strengthens to 6.2% in FY 2021, which is when we estimate that Finland’s EBIT margins will recover.
Peer valuation indicates significant discount
The stock has underperformed the OMXSTHPI by ~30% in the last 3 months. As the financial targets suggest, we think the market views this as a growth case, and confidence might have been hurt of late. However, investors should not forget the impressive profitability shown by Capacent in the past, with EBIT margins between 8% and 12%. Looking at our peer gro
...
- Läs mer på Introduce
Läsaren av innehållet kan anta att ABG Sundal Collier har erhållit eller kommer att erhålla betalning för utförandet av finansiella företagstjänster från bolaget. Ersättningen är på förhand avtalad och är inte beroende av innehållet.
info@introduce.se (Introduce.se)
ABG Sundal Collier - Introduce.se