Q3 EBITA SEK 86m, -8.0% vs. ABGSCe

Minor estimate changes on report and recent M&A

’20e-’22e EV/EBITA 34-29x

Q3’20: Recurring sales +17.1% y-o-y, ~0% organic
Vitec reported Q3’20 group net sales of SEK 321m, -4.7% vs. ABGSCe, +11.2% y-o-y but -4.7% organic due to lower one-time “Other revenues” mainly stemming from the cancellation of hardware sales in Denmark, which is in line with Vitec’s strategy. Recurring revenues of SEK 277m comprised 86.2% of net sales, +1.9pp vs. ABGSCe, growing 17.1% y-o-y but ~0% organically. Group EBITA amounted to SEK 86m, -8.0% vs. ABGSCe, for a margin of 26.8%. The slight miss on EBITA mainly stems from slightly lower than expected net sales and higher-than-forecasted personnel costs; we had thought this metric would remain muted due to COVID-19 impacting business travel etc. Diluted EPS of SEK 1.30 was 21.5% below our estimate.

’21e-’22e EBITA up ~0.3% on latest acquisition
We lower current FY EBITA by -2.9% on the back of the report. We make only minor estimate changes to ’21e-’22e, increasing estimated EBITA by ~0.3% on the back of the latest acquisition of NexGolf Oy. On a different note, we find that Vitec has expanded its available credit facility with Nordea and SEB from SEK 500m to SEK 1.0bn, which will facilitate further M&A growth. Management also reports growth in recurring revenues and service revenues could be impacted by a prolonged COVID-19 pandemic, effectively impacting organic growth.

Vitec trading at EV/EBITA levels ~40% above peers
Based on our updated estimates and at the current share price, we find that Vitec is currently trading at an EV/EBITA of 34-29x for ’20e-’22e. This is approximately a ~40% premium to our peer group, which consists of Nordic industrial roll-ups like Lifco and international software roll-ups like Constellation Software (median EV/EBITA based on FactSet cons.).

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