Alcadon: Organic growth of 8%

Alcadon: Organic growth of 8% - ABG

Sales up 92% y-o-y, of which 8% is organic
‘21e estimates slightly down on EBIT miss
12x EV/EBIT, ‘22e-‘23e lease adj. FCF of 6-7%

Sales were in line with our expectations at SEK 183m (0% vs. ABGSCe 183m) 92% y-o-y, of which 8% was organic. All of the organic growth was attributable to Norway, which grew 30% y-o-y on strong sales to network operators whereas Sweden was flat y-o-y. Meanwhile, EBIT was somewhat softer than expected at SEK 17.3m (-9% vs. ABGSCe 19m), corresponding to an EBIT margin of 9.5% (7.1%) vs. ABGSCe 10.4%. The margin miss was attributable to higher-than-expected opex. To our understanding, Alcadon is strengthening its organisation in Denmark and Germany to meet the high demand, which is pushing personnel costs higher. However, since the announced orders do not commence until Q4’21 (and ramp up during ‘22e), this puts temporary pressure on the margin and is the main explanation for the margin deviation.

Alcadon is trading at 12x ‘22e EV/EBIT and offers a ‘22e-23e lease adj. FCF yield of 6-7%. We do not include any further acquisitions in our estimates, but we note that management are very clear that M&A is a key priority going ahead. We feel confident in Alcadon’s ability to conduct value-creating acquisitions for two reasons: 1) the impressive acquisition of 6X International has exceeded our expectations and 2) the CEO’s prior experience at Addtech and Nordstjernan, among others, where he was involved in several successful acquisitions.

Alcadon: Organic growth of 8% - ABG

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Alcadon: Organic growth of 8% - ABG

Elliott Wave: GE Aerospace (GE)

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