Carnegie Investment Bank
BTS Group
Date Title Alternative
2024-05-08 Heading towards easier comparables Download | Show Close
2024-04-04 Interestingly positioned Download | Show Close
2024-02-26 Strong finish to the year Show Close
2023-11-13 Implementing measures to strengthen profitability Show Close
2023-08-21 Growth below our year end estimate but solid profitability in the quarter Show Close
2023-06-21 Less conversation more action Show Close
2023-05-15 A challenging start to the year Show Close
Research | 15 May 2023 | BTS Group

A challenging start to the year

 

Weak tech sector development leaves revenues and profitability under pressure

Q1 sales reached SEK 579m, suggesting growth in constant currencies of 2%. This was short of the level required to reach our full-year estimates. The weaker number was caused by sales in the company’s largest market, North America, down 6% in constant currencies. This is attributable to tech sector clients having postponed projects owing to cuts and also to the greater economic uncertainty. EBITA came in at SEK 47m, representing a margin of 8.2%. This mediocre margin can partly be blamed on lower revenues plus the company not fully compensating for wage inflation. Following the close of the quarter, BTS acquired The Boda Group, which should bolster both growth and profitability.

Strong history justifies premium valuation

Since its listing in 2001, BTS has seen currency-adjusted average growth of 13%, while EBITA has grown by 16% over the same period. Given its status as the leader in a fragmented market, we expect this growth to continue. Over the past two years, the margin has improved versus the historical average, leading to an increase in return on equity. Thanks to its strong past, we consider DCF the best valuation method for the company.

 

Estimate changes reflect increased economic uncertainty and acquisitions

Owing to the uncertain economic environment, we lower our revenue estimates for BTS by 2% across our forecast period. We judge the Boda acquisition will add some 3% to the 2022 sales level. Despite the company’s intention to reduce its cost base by SEK 60m from the 2022 level, we lower our EBITDA estimates by an average of 10% over our forecast period and by 13% for the current year. Given these estimate changes, we trim our fair value to SEK 400–410 (from SEK 425–435).

 

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2023-02-28 FX tailwind continued in the quarter Show Close
2022-11-14 FY guidance retained Show Close
2022-08-22 Beats every estimate and boosts forecasts Show Close
2022-05-17 Impressive growth Show Close
2022-04-13 Stronger than ever with a new CEO Show Close
2022-03-02 Stability in uncertain times Show Close
2021-08-19 Record quarter and improved outlook Show Close
2021-05-20 Strong profitability Show Close
2021-02-26 Resumed guidance provides upside potential in estimates Show Close
2020-08-19 Maintaining cost base in order to face pent up demand Show Close

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