Ferronordic saw solid growth in Q4, with sales up 43% y/y and adjusted EBIT up 56%, for a 6.8% margin. However, operations and growth were hampered by the ongoing supply constraints, which the company expects to continue "well into 2022". For our 2022 estimates, we pencil in 16% sales growth and adjusted EBIT increasing 21%, as Germany's margin (~25% of 2022E sales) is also turning positive in 2022. We lower our EBIT estimates by 5% for 2022 but maintain those for 2023E-24E to reflect a tougher supply situation in 2022 (we are 5% below consensus for 2022). That said, we expect geopolitical news flow to drive Ferronordic's near-term share performance. Ferronordic is valued at an implicit ~20% WACC, trading at 2023E EV/EBIT of 4x. We cut our multiples-based fair value to SEK 208-345 (254-356), implying a 2023E EV/EBIT of ~4.0-6.5x. Marketing material commissioned by Ferronordic.
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