Christian Berner Tech Trade
Christian Berner Tech Trade - Z&I holds back worse performance (ABG Sundal Collier)
2021-02-26 20:12
Decline in volumes, but 25% adj. EBITA uptick
Not to be extrapolated; EBITA down 3% ‘21e-‘22e
10x EV/EBITA ‘22e, 11-9% FCF yields ’21-‘23e
Q4’20 delivered softer than expected resultsCBTT delivered sales of SEK 196m (-10% vs. ABGSCe 217m), a decline of -9.1% y-o-y (ABGSCe +1%), while the gross margin improved to 44.1% (34.4%), primarily driven by revenue recognition of a pre-announced Zander & Ingeström (‘Z&I’) project in Belarus. Group adj. EBITA came in at SEK 14m (vs. ABGSCe at 16m) for an adj. EBITA margin of 7.0% (5.1% Q4’19, ABGSCe 7.6%). Earnings within the Process & Environment division were primarily driven by high demand for boilers and an improved margin due to the Belarus project, which boosted the margin to 10.1% (8.0%). The Materials Technology division delivered a solid quarter and increased the EBITA margin to 8.3% (vs. softer comps in Q4’19 of 2.6%). EPS came in at SEK 0.37 (0.44) (ABGSCe SEK 0.54), negatively affected by a reconstruction-related extraordinary cost of SEK -4.2m. Management highlights that the pandemic still has affected operations, as it has limited customer interaction and CBTT’s on-site services. Finally, the Board proposes a dividend of SEK 0.75 (0.60), corresponding to a pay-out of c. 50%.
Slightly lower volumes, but LT estimates largely unchanged
We leave our overall estimates relatively intact, as we forecast stronger sales work during 2021, with sales and earnings set to be driven by the two added companies in Q4’20 and strong markets for heating projects in Europe and China, which should benefit Z&I’s operations. Although we keep our estimates relatively intact, we make slight revisions and lower EBITA by 3% for ‘21e-‘22e; this indicates a sales CAGR of 5% and an EBITA CAGR of 9% in ’19-‘23e.
Trading at 10x EV/EBITA ‘22e, 11-9% FCF yields ‘21e-‘23e
On our estimates, the share is trading at c. 10x EV/EBITA ’22e, c. 14% below its 5Y historical average and offers ~10% FCF yields ’21e-‘23e and an EBITA CAGR ’20-’23e of c. 15%. M
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