Ferronordic delivered a mixed Q2 report, growing sales 68% y/y (more than expected), but it is still loss-making at the EBIT level (SEK -10m), due to high overhead costs in preparation for using its waning yet still large net cash position to enter new markets and product areas; for example, contracting services in Kazakhstan. The company's net cash position as of Q2 was SEK 36 per share, compared to SEK 45 in Q1. We raise our sales estimates slightly, mainly for H2 2023, owing to higher equipment sales (dilutive margin), and EBIT largely unchanged in absolute terms owing to higher opex. We lower our multiples-based fair value range to SEK 65-72 (67-74), representing 2024E EV/EBIT of 7-12x. Our selected key peers, MEKO and Finning, are trading at 7-9.5x 2024E EV/EBIT. Marketing material commissioned by Ferronordic.
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