Q4'23 results preview According to our forecasts, Seco Warwick's consolidated sales revenue in Q4'23 may be comparable y/y. We assume clear sales increases in the vacuum furnace and Aftersales segments. Weaker y/y sales, in our opinion, will take place in the CAB AP and melting furnace segments.
In Q4'23, we anticipate a clear y/y improvement in profitability on vacumm furnace production and a large contribution from the high-margin Aftersales segment. This, in turn, translates into a marked improvement in Q4'23 results at the EBITDA level (+16% y/y). The projected lower y/y net result is due to negative foreign exchange differences booked in Q4'23.
In our view, Seco Warwick will report a marked improvement in cash flow from operations in Q4'23 and, as a result, a decline in net debt relative to Q3'23. In our view, Seco Warwick may record a marked improvement in new order contracting in Q4'23 (the highest quarterly in 2023), which in turn will lead to a record order backlog in the Company's history (PLN 576mn).
OPINION: SLIGHTLY POSITIVE Seco Warwick will, in our view, positively surprise with a successful yearend with improved y/y results and strong cash flow from operations. In our view, the high inflow of new orders will pay off with a record order backlog in the Company's history. As a result, the high backlog may also boost investors' confidence in the Management Board's 2024 incentive program target (PLN 31.4mn -> implies 9x P/E'14). In this document we are not changing our recommendation, forecasts, or price target for Seco Warwick.
