Q3 report on 4 February

‘22/23-‘23/’24 EBITA estimates up 4% on M&A

Trading 2% below peer group

Q3 expectations – another solid quarter
We forecast Lagercrantz to deliver another strong quarter in terms of organic growth and profitability. We expect sales of SEK 1,314m, +22% y-o-y (10% organic, -1% FX and 13% M&A). To our understanding, the underlying market demand is on par with the previous two quarters, whereas slightly tougher comps explain the q-o-q downtick in organic growth. We expect Lagercrantz will continue to handle the current component shortages, cost inflation and supply chain issues well, enabling the company to defend its high margins. We estimate adj. EBITA of SEK 211m, corresponding to a margin of 16.0%, up 0.4pp y-o-y and flat q-o-q.

Acquisitions driving positive estimate changes
We raise our ‘21/’22-‘23/’24 sales and adj. EBITA estimates by 0-3% and 1-4%, respectively, due to the four latest acquisitions previously not included in our estimates. Looking ahead, we estimate ‘21/’22-‘23/’24 sales and adj. EBITA CAGRs of 5%, but we do not include any further acquisitions in our estimates. Nonetheless, we do note that Lagercrantz has maintained a high acquisition pace so far during ‘21/’22, having completed seven acquisitions with total sales of ~SEK 670m (16% of ‘20/’21 sales). Additionally, the average size of the acquired companies in terms of sales at SEK 95m has been substantially higher than the 5-year average of SEK 56m. To our understanding, the M&A pipeline going ahead is solid and the company’s ability to proceed with multiple deals simultaneously has increased along with Lagercrantz’ increasing size. Thereby, further acquisitions represent upside risk to our estimates.

Currently trading at 26x f12m EV/EBITA
The stock is down 21% YTD and is currently trading at 26x f12m EV/EBITA, ~2% below our core peer group (Addtech, Indutrade, Lifco and Sdiptech), but 48% above its own 5y average. Lagercrantz has performed similarly to peers historically (10Y EB
...

research@abgsc.com (Introduce.se)

ABG Sundal Collier - Introduce.se