Scanfil: Acquisitions are back on the agenda - Nordea

Scanfil updated its strategy at the CMD event on March 5. Vision is to be the most preferred manufacturing partner for its customers. Moreover, the segment reporting structure was streamlined and acquisitions came back to the growth agenda. New long term average annual revenue growth target is set to 10% (old 5-7%). The company’s new EBIT margin target is 7-8% (old 7%). Net debt per EBITDA target is 1.5x and dividend payout ratio target 1/3 of the earnings per share. Scanfil’s M&A firepower is some EUR ~150m. Acquisition are needed to gain new customer accounts and more floor capacity. Regardless of long term ambitions, the FY 2024 guidance midpoint indicates 5% lower net sales y/y at the group level, but net sales could even grow y/y if the destocking effects seen in several sectors come to an end. Ongoing H1 2024 could still be weak for the company but H2 2024 clearly better. The ompany's current valuation is below the peer group median, but a small discount may be justified if Scanfil cannot improve 2024 net sales and EBIT y/y.