Despite the expected slump in new orders, Balco should in our view be able to keep its operations and delivery schedule unchanged during 2020 and early 2021 due to the strong order backlog (c. SEK 1.6bn in end Q1). We expect orders to pick up again in H2 2020 but remain somewhat cautious on the possible second wave threat that could have a negative impact on customers’ willingness to initiate new projects during the autumn and impact 2021/22 deliveries.
Fair valuation mid-point increased slightly to SEK 98 (96)
Our updated fair valuation range is set at SEK 89-108, with mid-point value indicating a fair share value of SEK 98 (96) per share. The fair valuation mid-point implies 2021E EV/EBIT of 12x.
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