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Beijer Electronics: Volume and operational excellence - Redeye

Redeye increases its estimates and fair value range of Beijer Group after a review of the case. We argue that the company offers investors a compelling combination of organic and acquired growth, coupled with margin expansion and a good chance of multiple rerating. This thanks to a rejuvenated high-end product portfolio, years of relation-building, and a well-staffed organization, ready for when demand returns across its markets.

We believe the reason lies in Beijer Group's historical difficulties to achieve good margins and returns on invested capital. However, we expect this to change in the coming years, thanks to the high-end product portfolio and the ensuing operating leverage when volumes increase. We have already seen signs of it in the incremental EBIT margins prior to the pandemic. Thus, we have increased our base case to SEK 65 (SEK 42).
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