Serstech Q2: Product launch and stable delivery
Research Update
2024-07-17
07:05
Analyst Q&A
Closed
Martin Wahlström answered 5 questions.
Redeye updates its estimates and valuation following Serstech's Q1 2024 report. Overall, the financials were in line with our estimates and the orders that had been announced beforehand. We make small downward revisions to our fair value range and look for new order announcements to derisk our estimates and close the c30% gap between the share price and our Base Case.
Martin Wahlström
Mark Siöstedt
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Serstech posted net sales of SEK21.4m, against our estimate of SEK22.0m, corresponding to a c3% miss. Sales of SEK19m were announced beforehand (including SEK11.5m postponed from Q1 announcements), meaning that the numbers were mostly known in advance. Compared to last year, sales were down 35%, but this was due to the large SEK27.5m order from Proengin in the comparable period. Net income was SEK3.6m, against our estimates of SEK2.8m, with most of the deviation explained by a decrease in D&A following the complete write-down of a previously capitalised intangible asset. We mostly maintain our estimates, although we nudge down D&A and increase OPEX on the basis of payroll expenses that were slightly higher than estimated.
During Q2 2024, the company launched its new product, the Serstech Arx mkII. It seems the company has already built a backlog to be delivered upon throughout Q3, although the exact magnitude remains unknown. It also announced two orders, one amounting to SEK5.6m and one amounting to SEK1.9m from the US military.
We lower our Base Case to SEK2.2(2.3) per share following our estimate revisions on the back of the quarterly report. Similarly, we reduce our overall fair value range to SEK0.7(0.8) - SEK4.4(4.7) per share. The stock is currently trading at a P/S of 4.3x and a P/E of 29.5x for 2024e. We view larger order announcements as drivers for future share price performance.
SEKm | 2022 | 2023 | 2024e | 2025e | 2026e |
Revenues | 22.4 | 68.3 | 89.0 | 120.6 | 148.6 |
Revenue Growth | -8.3% | 268% | 36.0% | 40.9% | 23.2% |
EBITDA | -21.2 | 12.9 | 21.0 | 41.0 | 57.5 |
EBIT | -29.3 | 0.95 | 12.7 | 32.3 | 48.5 |
EBIT Margin | -171% | 1.5% | 14.9% | 26.8% | 32.7% |
Net Income | -29.6 | 0.72 | 12.4 | 32.3 | 48.5 |
EV/Sales | 1.5 | 1.6 | 4.2 | 2.8 | 2.0 |
EV/EBIT | -0.9 | 107 | 28.2 | 10.3 | 6.0 |
Disclosures and disclaimers
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