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Atvexa: Solid Q3 numbers, prolonged M&A processes - ABG

Q3 sales growth of 8.9% y-o-y (2.2% organic) Small positive revisions, ‘22/’23e sales up 1.2% Fair value range of SEK 73-120 (72-118) Q2: Sales +2% and adj. EBIT +18% vs ABGSCe

Atvexa reported Q3 sales of SEK 627m (+8.9% y-o-y), of which 2.2% was organic. It was 2% above ABGSCe but below the financial target of achieving sales growth of 15% y-o-y. The challenge to reach the growth target in H2 was something we highlighted in our last research report and the main reason is a lower contribution from acquisitions than we have previously seen. Atvexa says that M&A discussions are being prolonged as sellers have not yet fully adapted to lower valuations. In Q3, Atvexa made three acquisitions and followed that up with an additional acquisition after the period, which indicates that sellers are slowly accepting the new reality. Adj. EBIT excl. IFRS 16 was SEK 29m (19m), +18% vs ABGSCe and corresponding to a margin of 4.7% (3.3%). The deviation is explained by lower opex than we expected.

Additional M&A and higher organic growth behind revisions We think that the higher profitability that we saw in Q3 is temporary and that we will see a higher opex level next year as we should have lower covid-19 related sick leave. This year increased sick leave led to cost savings in the sector as temporary staff have been hard to get hold of. For sales we include the latest acquisition and increase our organic growth assumption slightly. This leads to ‘22/’23e sales revisions of +1.2%, with an unchanged adj. EBIT excl IFRS 16 margin assumption.

Currently under bid from DeMina at SEK 88 per share On 11 July, DeMina announced a bid for Atvexa of SEK 88 per share. DeMina is a group consisting of Atvexa’s founder, board members and the previous CEO. At the date of the announcement, it held 68.4% of the shares and 94.5% of the votes in the company. The bid committee has recommended the bid and the acceptance period ends on 9 August. The bid equals ~9x EV/EBIT, excl. IFRS 16, on our ‘21/’22e numbers.

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