B3 Q1 – 15.8% growth/Ebit 13.0%
As you have seen last week B3s share price dropped a lot while peers was down a lot less (Prevas, Softronic, KnowIt) and some companies not down at all (CAG, Netcompany). The question is, is it justified? Let’s have a look at 5 elements….

1 Accounting facts – best ever Q1
B3 delivered 11.7% growth and an Ebit sized 12.6%. Ebit was 40.9 Mill SEK and Eps was 3.40 SEK.  
It is best ever Q1 Volume, best ever Q1 Ebit and best ever Q1 Eps😊

2 Underlying realities – even better
If you include Poland in the figures (called alternative key figures in Q1 report) you will see higher volumes with 15.8% growth on company level. Poland alone was growing with an impressive 67%.  Including Poland, you end up with an Ebit sized 13.0%.

3 Market Outlook – some uncertainties but…
Yes, the demand in the market is lower compared to last year (which was a very strong market). Yes, utilization rate in Q1 was lower and B3 communicated the reduced utilization rate transparently with new investor information – this is building credibility – right? But remember … that lower utilization rate is included in facts above (historical high figures). Hmmm … what about coming quarters? It might drop more, of course, since Sweden (and Europe) is struggling with high inflation, increased interest rates and a more uncertain world but remember ….. what does companies and public sector need in order to; innovate, reduce cost, increase efficiency, and change value chains ….? More IT and consultancy perhaps? What does companies and public sector need to protect themselves from more; fraud, crime, cyber attacks, and a more complex and faster changing environment ….? More IT and consultancy perhaps?

 4 What does sector analysts say?
Remember, sector analysts have been around the last 30 years or more and Pareto gave the following statement one day after Q1 reporting when share price was 22% down.

  • «Case intact» (Headline), target price 240 SEK

  • «we argue the discount to peers…..is unjustified.»

The day after, ABG arrived with their report (paid analysis)

  • «More competition and normal margins» (headline)

  • «We reiterate our fair value range of 160-220» 

5 What about 2025 target 1.7 bill and 12% Ebit? Ahead of schedule
The company doesn’t present any annual guiding, but at the Capital Market Day B3 said «1.7 bill SEK in volume and 12% Ebit on average in that period».  «Growth should mainly come from organic growth». If you kindly draw a straight line from Jan 1st 2023, to Dec 31st 2025 you will see that B3 is ahead on volume and margins. If you can’t draw the line, ask your daughter or son, or send me a mail 😊

Summary: You can figure it out - can’t you?
I’m also the chairman of the Board and have recently received feedback it’s not prudent of me to communicate a target price or put my analyses of B3 on my webpage.
I consider that feedback to be fair and I have decided to be a bit more careful in my communication. I know you understand.

 Disclaimer: I’m the biggest shareholder so you cannot trust me (or perhaps you can?)

Sverre Bjerkeli

Analyst trainee, Hvaler Invest AS
Lillestrøm, 09.05.23