Elanders' Q1 report fell 15% short of our expectations on the back of a more severe COVID-19 impact than we had pencilled in from Asia, the Electronics business and also from the European automotive industry at the end of the quarter.
We cut our 2020 earnings estimates by ~50% to reflect the automotive production closures and the softening consumer demand burdening Fashion & Lifestyle. Looking beyond 2020, however, we argue that Elanders could come out as a stronger company on the back of significant cost reductions but primarily from gained market shares.
We argue that both the logistics and printing industries are fragmented with many smaller companies that will most likely not survive a downturn of such size we are seeing from COVID-19. In addition, with its strong cash flows and unutilised credit lines of SEK 1.2bn, Elanders does not run immediate balance sheet risk, in our view.
We lower our multiples-based SOTP valuation range to SEK 56-76 (72-94) per share. Marketing material commissioned by Elanders.
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