Q2 report due on Thursday, 19 August

‘21e EBITA down by 4% due to acquisition costs

12x ‘22e EV/EBITA on 21% EBITA CAGR ’20-‘23e

Q2: M&A in focus
We expect sales of SEK 183m, +12% y-o-y (2% organic, 10% M&A, 0% FX) in Q2, mainly driven by the acquisitions of GF Swedenborg, Alfa Tec and Empakk, whose numbers are not included in the comparable period. We expect the modest order intake during the last R12m (down 13% y-o-y) to weigh on organic growth. We estimate EBITA of SEK 12m for a margin of 6.3% (8.5%), negatively affected by acquisition-related costs of (ABGSCe SEK 2m), increased raw material prices and longer lead times on pandemic-related restrictions and component shortages. Divided by the two segments, we expect Process & Environment to generate sales of SEK 121m and EBITA of SEK 10m, corresponding to a margin of 8.0% (7.5%). For Materials Technology, we estimate sales of SEK 62m and EBITA of SEK 6m, with an EBITA margin of 10.3% (10.4%).

Estimate changes and outlook
We lower our ‘21e EBITA by 4% given the expected acquisition-related costs and increased input costs. We forecast organic sales growth of 4-5% in H2, supported by recovering end-markets, increased order intake and easy comps. Overall, we forecast FY’21 sales growth of 6% (M&A 7%, FX & organic slightly negative), with EBITA margins of ~7%, implying 25% EBITA growth. We expect the positive order intake momentum in H2’21e to continue in ‘22 and drive organic growth. This should lift the organic growth to 8% for ‘22e and ‘23e, respectively, implying a ’20-‘23e sales CAGR of 8%. We expect the last year’s structural cost reductions, combined with higher volumes, to boost the EBITA margin to 8-9% for ‘22e and ‘23e, respectively. CBTT should thus soon be able to reach its financial target of a 9% EBITA margin.

Reiterate fair value range of SEK 28-48 per share
CBTT is trading at 12x ‘22e EV/EBITA, while offering lease adj. FCF yield of 9-10% ’22-‘23e. We see a solid outlook over the coming years, with 21% EBITA
...

research@abgsc.com (Introduce.se)

ABG Sundal Collier - Introduce.se