Lagercrantz: Continued strong performance in Q1 - ABG
This is a third party research report and does not necessarily reflect our views or values
Q1 expectations
Lagercrantz should have a solid Q1’21/22. We expect sales of SEK 1,180m, +21% y-o-y (+11% organic, -4% FX, +14% M&A). Niche Products (30% of sales) should be the main driver of EBITA growth in the quarter, largely driven by a high M&A contribution, and despite our expectation of a 240bp EBITA margin downtick y-o-y. We expect Electrify to be relatively stagnant sequentially due to limited expansion in electrical installation, however with solid 12% organic growth y-o-y, and improved margins as a result of the restructuring (EBITA margin Q1’21/21e at 16%, vs 14% Q1’20/21). Generally, Lagercrantz subsidiaries should have good pricing power and we expect limited margin impact from increased input costs. We forecast an adj. EBITA of SEK 181m with a margin of 15.4% in Q1’21/22 (12.8% Q1’19/20, 12.7% Q1’20/21).
Estimate changes
We raise our EBITA estimates by 6-1% for FY’21/22e-‘23/24e on the back of a lesser margin impact from rising costs, higher organic growth and the acquisition of Libra adding c. 3.6% to sales. For ’20/21-‘23/24e, we forecast a 5% organic sales CAGR and a 10% EBITA CAGR.
Share view
The share is up 33% YTD and currently trades at 28x FY’21/’22e EV/EBITA. It is currently valued ~10% below our core peer group (Addtech, Indutrade, Lifco and Sdiptech) valued at 31x EBITA. Lagercrantz has performed similarly to peers historically, (10Y EBITA CAGR of 15%, same as peers excl. Sdiptech), and has a 5Y average EV/EBITA discount of 3% vs. peers.
Lagercrantz should have a solid Q1’21/22. We expect sales of SEK 1,180m, +21% y-o-y (+11% organic, -4% FX, +14% M&A). Niche Products (30% of sales) should be the main driver of EBITA growth in the quarter, largely driven by a high M&A contribution, and despite our expectation of a 240bp EBITA margin downtick y-o-y. We expect Electrify to be relatively stagnant sequentially due to limited expansion in electrical installation, however with solid 12% organic growth y-o-y, and improved margins as a result of the restructuring (EBITA margin Q1’21/21e at 16%, vs 14% Q1’20/21). Generally, Lagercrantz subsidiaries should have good pricing power and we expect limited margin impact from increased input costs. We forecast an adj. EBITA of SEK 181m with a margin of 15.4% in Q1’21/22 (12.8% Q1’19/20, 12.7% Q1’20/21).
Estimate changes
We raise our EBITA estimates by 6-1% for FY’21/22e-‘23/24e on the back of a lesser margin impact from rising costs, higher organic growth and the acquisition of Libra adding c. 3.6% to sales. For ’20/21-‘23/24e, we forecast a 5% organic sales CAGR and a 10% EBITA CAGR.
Share view
The share is up 33% YTD and currently trades at 28x FY’21/’22e EV/EBITA. It is currently valued ~10% below our core peer group (Addtech, Indutrade, Lifco and Sdiptech) valued at 31x EBITA. Lagercrantz has performed similarly to peers historically, (10Y EBITA CAGR of 15%, same as peers excl. Sdiptech), and has a 5Y average EV/EBITA discount of 3% vs. peers.