We expect Ferronordic to increase sales to SEK 1.2bn in Q3 2020 (up 23% y/y), despite substantial currency headwinds, which are the main cause for our negative estimate revisions. In the short term, we expect the EBIT margin to decrease y/y due to the expansion into German truck dealerships, but increase in the long term as Contracting Services grows in importance. The recent proposal to reinstate the dividend (in the wake of an improved market outlook) is promising for the business and implies a 3% dividend yield this year. As the share has recovered from the downturn, Ferronordic is now trading at close to 7x EV/EBIT 2021E, nearly a 50% discount to peers and a 17% discount to the midpoint of our multiples-based valuation range. Marketing material commissioned by Ferronordic.
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