Proact IT Group
Proact - System delays affecting Q4 negatively (ABG Sundal Collier)

2022-01-18 17:03
PW for Q4 sent out in December due to system delays
Adj. EBITA -2% 2021e, +2% 2022e, -1% 2023e
9.1x 2022e EV/EBITA is 44% below peers
PW for Q4 in December
On 15 December, Proact sent out a profit warning for its Q4 report. Although it said it sees strong demand for its systems solutions as well as its services so far in the quarter, the global semiconductor shortage is leading to significant delivery delays at several of the company’s largest suppliers. Proact expects this to result in delayed systems deals of SEK 150-200m not being delivered in Q4 as earlier expected, affecting sales accordingly. The situation is expected to be uncertain during the start of 2022, but Proact says it did not see any indications of further deterioration of delivery times and will enter 2022 with a good order backlog. We reduce our estimates by SEK 175m on sales for Q4’21e and add back an evenly split SEK 150m in Q1’22e and Q2’22e, as we conservatively think that this could cause some order losses if competitors are able to deliver. We further estimate that the EBITA margin on system sales is 3% vs the group margin of 6%.

We adjust estimates downwards for 2021e and up for 2022e
As a result of the delayed deliveries, we expect the lost sales in Q4 to be delivered in 2022, and with no further delays, 2022 should see solid growth. We estimate that the effect on EBITA is smaller as system sales carry a lower EBITA margin than service sales, and we therefore adjust our earnings estimates to a lesser extent.

Still trading well below peers
Based on our new estimates, the share is trading at 9.1x 2022e EV/EBITA with good potential for further M&A contribution given low leverage (net cash on lease adj. ND/EBITDA). This corresponds to 44% below European IT reseller peers.


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