Total sales matched our forecast and amounted to SEK210.5m (200.7), corresponding to 5% growth y/y. While the organic growth was -0.7% y/y, the underlying growth numbers (adjusted for number of working days, sub-consultants, and reselling of hardware/software) remain positive, which we find impressive in the current market. EBIT was SEK25.6m, corresponding to an EBIT margin of 12.2% (10.3). Our forecast was SEK22.0m and 10.5%, and the higher outcome was due to matching sales and lower OPEX. EBIT was 16% above our expectations. While few Nordic IT Consultants have reported their Q4s yet, we expect 12.2% to be strong in comparison.

The situation is seen throughout 2023, with lower demand from some sectors, including consumer discretionary, housing, and construction, while most sectors see normal markets remain. Management points out that CombinedX’s focus on specialist companies working with one or a few software platforms is an advantage, especially in more challenging economic environments. This is as customers tend to prioritise business-critical software over resource-consulting. The solid numbers seen in Q4 and all of 2023 support the statement.

Based on raised forecasts, we increased our Base Case to SEK61 (57). Despite CombinedX’s share price increasing by ~20% in the last three months and the solid 2023 performance, the company is still trading at a significant discount to peers at 6.3x EBIT 2024e, versus peer median of ~10x. Given that CombinedX can continue its solid performance – which we expect – we believe the valuation gap will narrow.