Sales -15% y-o-y, adj. EBIT +66% vs. ABGe

Phones -21% y-o-y vs. -41% in Q2’20

We expect cons. to raise its ’20e adj. EBIT by ~10%

Q3 results
Sales SEK 443m (4.4% vs ABGSC 425m and 5.0% vs cons 422m), EBIT SEK 25m (522.0% vs ABGSC -6m and 177.8% vs cons 9m), Adj. EBIT SEK 32m (66.2% vs ABGSC 19m), PTP SEK 25m (417.5% vs ABGSC -8m and 604.0% vs cons -5m).

Adj. EBIT above ABGSCe amid better margins for Phones
While Phones saw a y-o-y sales decline of -21% y-o-y, these were improved against Q2 at -41% y-o-y and corresponded to a 9% beat vs. our forecast. This suggests a solid recovery in demand. Care sales, however, were somewhat on the weaker side, and came in -6% vs. our forecast (but +4% y-o-y). Even so, Doro says that it started to see increased market activities in Sweden by the end of the quarter. In terms of margins, Care saw an EBIT margin of 7.8% (vs. ABGSCe 11.0%) while Phones’ EBIT margin was 7.2% (vs. ABGSCe 3.0%).

Valuation and estimate changes
Based on the Q3 report alone, we believe that consensus could raise its 2020e adj. EBIT by about 10%. Doro’s share is currently trading at 7x 2021 EV/EBIT on our unrevised estimates. Doro will host a conference call at 09.00 CET, dial-in: SE +46 8 56 64 26 92, UK +44 33 33 00 92 64, USA +1 83 35 26 83 83, FR +33 170 75 07 19.

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