Fra Norne
Weaker-than-expected 1Q, but positive stance and estimates not likely to change much
Kitron’s 1Q figures this morning were below our estimates, but 2021 guidance was reiterated. We continue to believe the company is at least going to deliver on the top of the guided range for 2021 and stay positive on the share.
Weaker-than-expected 1Q figures affected by unfavourable FX
Kitron released its 1Q21 report this morning with revenues of NOK 938m being about 7% below our forecast. This represented a YoY revenue growth of 7%, but negative FX developments shaved about 2%p from the growth figure. Lower revenues led to EBIT margin of 7.0% vs 7.5% in our forecasts, but still in line with the company’s guided 6.8-7.4% range for the full year. Thus, EBIT came in at NOK 65m vs NOK 75m forecasted by us.
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Full-year guidance maintained
Kitron has a guidance for the full year 2021 of NOK 3.9-4.2bn in sales (NOK 4.0bn achieved in admittedly exceptional 2020) with 6.8-7.4% EBIT margin. The company said that it is on track to reach this guidance after 1Q. After 1Q figures came in below our forecasts, we might lower our estimates slightly for this year, which were at the top of the guided range. However, we still believe the 2021 guidance is conservative. This is also supported by the still high order backlog of above NOK 2bn, which is flat YoY, but 8% higher adjusting for negative currency developments.
Positive stance to be reiterated with no major changes in estimates
It is going to be a challenge for the company to grow in 2021 after 2020, which was exceptional in many ways. Medical devices drove revenues in a pandemic year and a more normal sales for this segment is expected this year. However, Kitron is a high-quality company with a habit to outperform. The economy is also booming on the back of massive government spending, which should also provide some additional tailwind for results. Therefore, even if 1Q figures were not as high as we hoped and the stock price might react negatively to this, we continue to be positive towards the share and are likely to reiterate our Buy recommendation under little changed TPKIT_2021-04-21_IC.pdf (392,2 KB)
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