Ferronordic's report was a mixed bag. We calculate that group sales declined 15% organically, while EBIT increased 2% y/y mainly due to FX. We still expect a significant EBIT decline for H2 (-73% y/y). We lower our SOTP-based fair equity value range to SEK 22-50 (28-61), with the lower end based on our 2023 estimates and an inventory sell-off in 2022 valued at 1x EBIT, while the upper end includes Germany at a 5% margin (up from 2% in 2023E, adding SEK 28 per share at 7x EV/EBIT). Its 2023E valuation is now 8x EV/EBIT, with an implied WACC of 36% and a 3% dividend yield. Marketing material commissioned by Ferronordic.
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