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Alcadon: ABGSC’s Investor Days feedback - ABG

ABGSC hosted Alcadon’s CEO at investor day today
Ambitious European agenda…
…with ample M&A headroom

A number of market drivers
We hosted Alcadon CEO Sonny Mirborn at today’s ABGSC investor day seminar. Mr. Mirborn highlighted the strong underlying growth for Alcadon. In general, what is driving Alcadon’s growth is the increased volumes of data in society. According to Mr. Mirborn, the volumes of data are expected to grow by a 30-40% CAGR between ’20-’26, driven by, for example, 5G and Internet-of-things (IoT). A prerequisite for the increase in data volumes is fiber and storage capacity, normally cloud solutions (data centers). The data center segment is a prioritized area for Alcadon and has been for the last three years. Investments in Nordic Data Centers are expected to grow by a 10-25% CAGR ’20-’25. Alcadon mainly focuses on the subsegments Colocation and Enterprise, which are smaller data centers (edge computing), and not the large data centers provided by Facebook and Alphabet, for example.

Gradually increasing its footprint in Germany
Last summer, Alcadon signed two larger contracts in Germany with Emtelle and Deutsche Glasfaser with a combined annual order value of ~SEK 240m. Deliveries were planned to commence in Q4’21 but have been delayed due to the pandemic. In its Q1 report from 22 April, however, the company stated that deliveries have commenced in small scale. Today, Mr. Mirborn reiterated the message that Alcadon has had some deliveries on both projects and that sales and deliveries for both contracts are slowly and gradually picking up. This de-risks our estimates and will be a main driver of organic growth for the group at ~45-50% in H2’22e.

Strong balance sheet allows for ambitious European agenda
Mr Mirborn stated that Alcadon has an ambitious European agenda, aiming to venture into new markets. We expect this to be done inorganically, through Alcadon’s acquisition agenda. Thus, we see a possibility of further M&A, providing upside to our estimates. ...
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