GARO.ST

Research

  • Sell by Alpha (01/02/2024)
    • 20.00 -29.58% by 01/08/2024

    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
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  • 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
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      1