Administer - Good start in terms of profitability

EBITDA up 56% y/y in Q1
Administer reported Q1 net sales and EBITDA of EUR 19.0m and 1.7m respectively. Revenue declined by 3.1% y/y, driven by the 14.8% sales decline of Econia due to among other things the weakened economic activity and industrial strikes. Net sales in the other business areas was flat or grew slightly. EBITDA in turn improved by 56% thanks to the profitability programme initiated last year. On our corresponding H1/24 estimates (EUR 39.0m and 2.6m) the net sales development was fairly as expected while the profitability development was upbeat, as Q2 profitability should be closer to Q1 levels, noting the weakness in Q2/23 figures due to collective agreement related one-off installments. 

2024E EBITDA estimate up by some 10%
We have raised our 2024E EBITDA estimate by close to 10% and our EBITDA-margin as such to 8.1%, above the guidance range midpoint of 7.5%, while our net sales estimate remains fairly unchanged, closer to the lower end of the guidance. We assess that the larger part of the impact of the profitability programme was visible in Q1 and further larger profitability jumps to rely on an improved economic situation and sales growth. We remain cautious in terms of growth given that the near-term Group potential appears to rely on the recovery of Econia, expecting on average lower single-digit growth for the remaining quarters. According to management, Econia’s sales is expected to grow during Q2 and Q3 compared with Q1. 

BUY with a target price of EUR 3.0 (2.6)
With quite some uncertainty heading into 2024, Q1 was in some sense a sigh of relief, as profitability improvements came through better than expected and challenges with growth appear mostly contained to Econia. We adjust our TP to EUR 3.0 (2.6), valuing Administer at ~15x 2024e P/E, BUY-rating intact.