Studsvik
Studsvik - Profitability improvements across the board (ABG Sundal Collier)
2020-07-22 08:59
Sales beat on higher utilisation, EBIT ahead of estimates
Positive long-term EBIT revision of 45-22%
COVID-19 risks, but no real impact yet
Q2: Sales +8% and adj. EBIT SEK 26m above ABGSCeStudsvik reported net sales for Q2 of SEK 168m (160m), which was 8% ahead of ABGSCe as the feared COVID-19 impact in Germany was lower than expected. All segments except Scandpower showed y-o-y improvements and were ahead of estimates. For adj. EBIT, all segments showed y-o-y improvements and were ahead of estimates. The largest deviations from ABGSCe on adj. EBIT were in the F&MT and Waste Technology segments. However, both experienced above-average utilisation in the quarter, which makes us a bit cautious to extrapolate their performances in the coming quarters. The total adj. EBIT deviation was SEK 26m above our estimates.
Increased group profitability as cost saving bites
We saw a clear profitability improvement in Q2, and although we are a bit cautious about the F&MT and Waste Technology, we make positive long-term revisions for all segments following the report. The cost saving of SEK 10m in each of Germany and Waste Technology that Studsvik has announced for 2020 is well ahead of plan, and we think it is rather conservative of the company to stick to its guidance at this point. In addition, F&MT delivered an EBIT margin above expectations and even Scandpower managed to improve its margin with declining sales. Overall, we are impressed with how well Studsvik managed its cost in the quarter and make positive long-term EBIT revisions of 45% for 2021e and 22% for 2022e.
Stock is trading at a P/E of 9.1x on 2021 estimates
So far Studsvik has only had a minor COVID-19 impact in Germany, to an estimated EBIT loss of SEK 8m. Further shut-down risk in Germany is still present, and travel restrictions might lead to delayed order intake, but we currently see only risks and no real impact. The share has performed in line with the OMXSTHPI over the last three months and now trades at a P/E o
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