Q1 outcome
HANZA reported Q1 sales of SEK 824m (+18% vs. ABGSCe 700m, +16% vs. FactSet consensus 708m), up 45% y-o-y (+26% organic, +16% M&A, +3% FX). The impressive organic growth (+14pp vs. ABGSCe 12%) shows that demand is strong, and the company says it now has a record order book in Germany, as demand is recovering after the pandemic. Main Markets reported another solid quarter above our expectations despite having to deal with external factors such as material shortages and Omicron effects. However, Other Markets’ margin continues to be affected by the ongoing expansion program, yet management says that earnings in the segment should normalise in H2’22, once the program is completed. All in all, group EBITA was SEK 41m (+6% vs. ABGSCe 39m, 0% vs. cons. 41m), for a margin of 5.0% (ABGSCe 5.6%, cons. 5.8%).
EBITA raised by 4% for ’23e-’24e, unchanged for ’22e
Due to the significant sales beat and the stated record order book in Germany, we raise sales for ’22e-’24e by 5%. However, we take a more conservative view on ’22e margins in Other Markets, particularly in H1. As such, we keep ’22e EBITA flat on the higher sales but lower margin, but we raise ’23e-’24e EBITA by 4%.
11-9x ’22e-’23e EV/EBITA, fair value SEK 38-58 (35-55)
As mentioned, we are more positive on the growth outlook following the Q1 report due to the strong demand shown. Also, despite some margin headwinds in Other Markets in H1’22e, we still see the margin gap between Main Markets and Other Markets tightening once the program is completed. On our estimates, the share now trading at 11-9x ’22e-’23e EV/EBITA, and following our estimate revisions, we raise our fair value range to SEK 38-58 (35-55) per share.
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