We have updated our forecasts and revised our fair value after the announcement from Sensys Gatso Group (SGG) of 2023 guidance and a reverse stock split through which 80 old shares become 1 new share. Compared to the mean of the SEK 550 650 forecast interval for sales and an EBITDA margin of 10 15%, we have been too optimistic on sales and too pessimistic on margins for the current year. Overall, however, our 2023e forecast has been in line with this average. Our 2023 EBITDA and EBIT estimates are thus largely unchanged, despite the lower sales forecast. A lower 2023e sales base does affect our EBIT estimates by an average of around 8% for 2024e and 2025e, though.

We have revised our fair value largely on account of the reverse stock split, but also due to the lower forecasts. Our new fair value amounts to SEK 90 95. We have applied an especially high risk premium to our DCF calculations on which our fair value is based as the company’s investments in digital platforms and expanded sales capacity, plus the timing of the large orders in Sweden and the Netherlands, introduce additional short-term uncertainty. We believe the company’s current investments are necessary for it to deliver the large orders that have been placed, but also to achieve its long-term goals and thus prepare the company for the future. As this uncertainty is likely to diminish in the future, we should be able to reduce our extra risk premium, which should, all else being equal, allow us to lift our fair value.

Solid order intake so far in Q2 focus on recurring revenues