Ferronordic: Keeps on trucking, despite softer market ahead - Nordea

Ferronordic will report its Q3 results on 16 November. We expect a decent quarter, with good underlying sales growth, but with EBIT still at SEK -10m (same as Q2), owing to high central costs (SEK 23m for Q3 2023E) incurred as the group prepares for significant expansion. We estimate that Ferronordic is in a position to acquire a dealership business with sales of SEK ~2.5bn by using its current net cash balance (SEK 539m as of Q2). This is based on our calculations of the investment in Germany, until it reached breakeven, representing a price-to-sales ratio (P/S) of ~0.2x. We make only limited estimate revisions, mostly due to FX. We continue to expect a softer market in 2024, supported by the likes of Volvo's European heavy-duty (HD) truck outlook, at -15% y/y. We lower our multiples-based fair value range to SEK 64-69 (65-72), representing 2024E EV/EBIT of 6-10x. Our key peers, MEKO and Finning, are trading at about 6-8.5x 2024E EV/EBIT. Marketing material commissioned by Ferronordic.