Polygiene has recently announced new financial targets for the period 2022-2026. The targets aim for net sales of SEK 1bn in 2026 and an EBIT margin above 30%. The company describes the targets as ambitious yet realistic. In order to reach the sales target a continued double-digit organic sales growth in combination with more M&A activities will be needed. External research firms Grand View Research and Markets & Markets expect the antimicrobial market to grow by CAGRs of 8.5% and 10.5% between ’21-’28 and ’21-’26, respectively. Polygiene sees an opportunity to gain market share with its dedicated sustainability focus and recent momentum from COVID-19, where the company excelled in its execution and gained attention from market participants.
Estimate revisions stem from SteriTouch
On 25 January Polygiene closed the acquisition of UK-based SteriTouch through its subsidiary Addmaster. SteriTouch is an antimicrobial product category within the private UK company Radical Materials. The acquisition is a pure synergy deal, where Polygiene only buys SteriTouch’s technology (and customers) and will incorporate it in Addmaster’s offering. One of eleven FTEs will be included in the deal. SteriTouch had 2021 net sales of GBP 1.39m and a gross profit of GBP 0.71m. The acquisition price was GBP 3.5m up-front with a potential earn-out of GBP 0.5m, depending on the growth rate during 2022. It corresponds to ~5x-5.5x LTM gross profit, where the deviation is determined by the future earn-out. Our estimate revisions for the forecast period mainly stem from the acquisition.
Fair value range a blend of DCF with and without M&A
We increase our fair value range to 39-59 (31-49). It is derived from a blend of three DCF scenarios excluding any M&A and a DCF scenario where we include four acquisitions between ’23 and ’26.
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