Sdiptech: EV-charging in, half PTS out
Redeye Research Note 2021/02/22
- Sdiptech sells Tello and its Swedish elevator businesses for an average of 11x EBIT
- Sdiptech buys UK-based charging-systems provider Rolec for 9x EBIT
- Net add of SEK ~53m in annual EBIT
- Net decrease of SEK ~95m in annual sales
- Management raises its 2021 margin guidance to 19-20% (17) on the EBITA* level
We have a positive view of the deals that were published Friday evening. Sdiptech manages to divest some of its non-core businesses and adds a high-margin company in an interesting and growing sector. Despite the acquired business arguably being more attractive, Sdiptech got a higher average multiple for its divestments relative to its acquisition.
We raise our Base case to SEK 340 (250) for two reasons. First, the deals’ net will add approximately SEK 53m in annual EBITA* at a multiple of ~9x. Second, the deals will make Sdiptech’s sales mix more attractive than previously.
We raise our EBITA* by 8% and 13% for 2021E and 2022E. Note that our increases are slightly lower than the net add of SEK 53m in EBIT suggests. That is because we remove our estimated future M&A for Q1 and Q2 2021.
Update 21:30 22 February following Sdiptech’s webcast
- Sdiptech expects Rolec to grow by ~12-15% annually – significantly higher than our forecasts of 5% organic sales growth in Water & Energy.
- Rolec has several well-known customers like IKEA, UPS, DHL, Skanska, and Heathrow.
- Rolec’s offering includes proprietary control-software.
- Fragmented market – Rolec is one of the largest in its segment.
- Sdiptech is open to divesting other businesses in PTS, given attractive pricing and the right kind of buyer.