• Order intake up 49% organically, but EBIT 29% below ABGSCe
• Less able to scale as costs increase; we cut '24e EBIT by 21%
• Trading 37% below peers. Fair value range SEK 40-89 (45-95)

Impressive order intake, but excitement held back by costs

Order intake was exceptional, surpassing our estimate by 56%. It was largely driven by the SEK 46m Italy order won in early December (not in our estimates). Even when excluding this large order, it would have been 23% better than ABGSCe. Nevertheless, the 49% organic order growth is showcasing impressive traction in a soft macro environment. Sales was slightly better (+3% vs. ABGSCe), also driven by EMEA. Despite solid gross margins, adj. EBIT missed ABGSCe by 29% as opex continues to increase rapidly. This is mainly a result of personnel expenses that increased by 50% organically y-o-y. The headcount has increased by 21% y-o-y with an incremental annual run-rate cost increase of SEK 4m per added employee based on Q4.

Cutting '24e EBIT by 21% on higher costs

Management has previously been confident that it could scale the business without additional costs. The picture does not seem to be as rosy as expected, and we raise our opex assumptions substantially, cutting '24e EBIT by 21% to reflect the higher run-rate. However, we lift our '23e estimates on the back of high order intake. C-RAD should continue with the high order-intake pace this year given upcoming large tenders in Spain (similar volumes to Italy) and the Czech Republic (about 25% of volumes). A large share of those orders will be delivered in H2'23. The situation in China also seems to be improving. We hence raise '23e sales and EBIT by 13% and 11%, respectively.

Valued 37% below peers, at 16x '24e EV/EBIT

C-RAD is one of the fastest-growing companies in its peer group, with a 33% EBIT CAGR in ’21-’25e. It is trading 37% below peers on ’24e EV/EBIT, at 16x. Our new fair value range is SEK 40-89 per share (45-95).