Detection Technology - Focus on outlook for 2019 and China
SBU net sales to decline in Q4, MBU still going strong in Q4
Due to a slowdown in China’s security market and tightening competition, DT has said it expects SBU sales to decline y/y in Q4’18, in contrast to the earlier guided single-digit y/y growth for H2’18. The visibility is limited due to the suspension of many Chinese infrastructure projects. We expect SBU Q4 net sales to be 15.0 MEUR (vs. 19.4 MEUR Q417). We expect continued good growth in MBU with Q418E net sales of 10.8 MEUR (vs. 8.1 MEUR Q417).
2019 outlook in focus, especially comments on China
DT expects net sales to grow moderately at the beginning of 2019. This estimate is based on the growth outlook for the overall X-ray imaging market, which is similar for 2019 as 2018, according to DT. In the Q4 call we look forward to hearing an update on the outlook and the Chinese market, as well as any new news regarding the recently released Aurora X-ray detector family (expected to support SBU’s net sales at end of 2019).
Estimates unchanged ahead of Q4, HOLD rating and target price of 16.5 euros maintained
We expect Q4 net sales to be 25.8 MEUR (vs. 27.5 MEUR Q417) and Q4 EBIT to be 5.2 MEUR (vs. 7.0 MEUR Q417). Thus, we expect 2018E net sales to grow 6% to 94.1 MEUR from last year’s 89 MEUR and EBIT to decline 3% from last year (19.3 MEUR 2018 vs. 19.9 MEUR 2017) due to lower SBU sales and higher R&D costs. We expect a dividend of EUR 0.45, which corresponds to a 40% EPS payout and 3% dividend yield. Our rating and target price, “HOLD” and target price EUR 16.5, remain unchanged ahead of Q4.