Garo Aktiebolag (publ)
Research by ALPHA
Author: Alpha
- 22.95 -7.27% (20/12/2024)
- SHORT-LIST (SELL)
GARO produces electrical system in two segments; e-Mobility (30%) and Electrification (70%). Earnings declined in 2022 and 2023 due to exposure to the construction industry. This resulted in a 85% decline in the stock price.
The earnings in 2023 are disappointing with 0.6kr/share (after adjustment for one-off items). Given the slow-down in BEV-sales and construction the 2024 outlook is all but promising.
At the moment the company is not invest-able with negative cash-flow, rising debt and dropping margins. The CEO and management need to present a valid turn-around strategy. Negative sentiment will prevail until actual improvements are visible in the results.
People (1)
CEO
The CEO is appointed in 2019 and has mainly a commercial background. A turn-around strategy under challenging market and financial conditions requires a different approach. Does Garo have the right leadership to make the turn-around?
01/02/2024 by ALPHA｜01
Financial (1)
Cash flow
Two years with negative cash-flow has increased net debt and reduced available financial resource for a turn-around. The financial strength (Debt/Equity 1.0) and current ratio 1.5 are not in a danger zone. However the trend is negative and the question is if management is doing enough given the expected market conditions for 2024.
01/02/2024 by ALPHA｜01