SinterCast
SinterCast - Continuing the stable trend (ABG Sundal Collier)

2022-01-19 10:15
Q4 report due on Tuesday, 8 February
’22e-’23e engine equivalent volumes lowered 10-6%
23x ’22e EV/EBIT, fair value SEK 130-230 (132-241)
Q4: A strong finish to 2021 for equipment sales
As was communicated in a recent company press release announcing preliminary 2021 figures, Q4 revenue amounted to SEK 29.6m (+3% vs. ABGSCe SEK 28.7m), down 10% y-o-y (-11% organic, +1% FX) against a strong Q4’20. Annualised engine equivalents, according to the press release, were 3.1m (ABGSCe 3.1m), up 19% y-o-y, and have now been stable at >3m for three straight quarters following five quarters below 3m (Q1’20-Q1’21). Equipment sales for Q4 were SEK 4.3m (+13% vs. ABGSCe SEK 3.8m), a strong quarter but down compared to an exceptional Q4’20 in terms of equipment sales (SEK 9.8m). We expect EBIT of SEK 8.6m, for a margin of 29% (28%), with the slight EBIT margin increase stemming from an estimated 2pp gross margin increase (73% Q4’21 vs. 71% Q4’20).

Engine equivalent estimates revised for ’22e-’23e
We raise our ’21e EBIT estimate by 2% to account for the stronger than expected 2021 preliminary results. However, for ’22e and ’23e we lower our engine equivalent estimates by 10% and 6%, respectively, as the company has communicated an ambition to reach 4.0m during 2022 (meaning the full-year average should be a bit lower). This brings down our ’22e-’23e EBIT estimates by 14-8%.

Market now more stable, but there is still growth ahead
On our current estimates, the share is trading at 23x ’22e EV/EBIT, offering 3-7% ’21e-’23e dividend yields (SinterCast tends to pay out ~100% of EPS). While we argue the steepest part of the market recovery should be behind us, we believe there is more growth to capture as production volumes in the automotive industry are still being held back by component shortages. Finally, as a result of our estimate changes, we lower our fair value range slightly to SEK 130-230 (132-241) per share.


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research@abgsc.com (Introduce.se)
ABG Sundal Collier - Introduce.se

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