ABGSC: Uppdaterad analys, omvänd vinstvarning

Equity Research - 14 June 2021 13:25 CET

HANZA

Reversed profit warning

• Expects sales of more than SEK 600m, ABGSCe 629m
• Expects EBITA of more than SEK 35m, ABGSCe 29m
• EBITA more than 19% better than expectations

Record-high margins

Hanza has issued a reversed profit warning ahead of the Q2'21 report. It expects at least SEK 600m in sales, compared to ABGSCe at SEK 629m. It mentions that the underlying market development has been strong, and that both Key Markets and Other markets has benefitted. Impressively, it expects that EBITA will surpass SEK 35m, which is at least 19% better than ABGSCe. It mentions that it expects the margin to be c. 5.8%, we expected 4.7%. This is a new record-high margin, with previous high of 5.0% and close to its target of having an operating margin above 6% over a cycle.

Strong signal for the rest of the year

Hanza has reorganized its branches and improved its cluster strategy through M&A over the past year, and it is beginning to show through higher margins now that the underlying market is displaying a strong momentum. Macro data is still showing a solid order intake which should mean that demand should be on a good level throughout the year, and that Hanza should be able to continue to showcase a high margin. We currently expect Hanza to reach an EBITA margin of 5.3% in 2023, which then implies an EBITA CAGR of 46% between '20-'23e. On that margin assumption, Hanza is trading at 7x EBITA '23e (SEK 22/share) with 9% FCF yield.

Strong performance YTD

HANZA is up 58% YTD and is on our estimates trading on EV/EBITA '21e of 11x. We are seeing strategic initiatives playing out, delivering higher margins.

Fast comment

Company-sponsored research: Not rated

Share price (SEK)	11/06/2021	19.7
Capital Goods, Sweden
HANZA.ST/HANZA SS
MCap (SEKm)		646
MCap (EURm)		64
Net debt (EURm)		53
No. of shares (m)		32.8
Free float (%)		70
Av. daily volume (k)		11
Next event	Q2 report: 27 Jul

Please refer to important disclosures at the end of this report

This research product is commissioned and paid for by the company covered in this report. As such, this report is deemed to constitute

an acceptable minor non-monetary benefit (i.e. not investment research) as defined in MiFID II.

HANZA

(SEKm)	Last year	Actual		ABGSC
	Q2 20		Q2 21		Q2 21e	Dev (%)
Net sales	559.0		600.0		628.7	-5%
EBITA	-12.6		35.0		29.5	19%
Adj EBITA	14.9		35.0		29.5	19%
EBIT	-16.1				26.0	-100%
Adj EBIT	11.4				26.0	-100%
Net profit	-19.6				14.4	-100%
EPS	-0.60				0.40	-100%
EBITA margin	-2.3%		5.8%		4.7%	1.1%
Adj EBITA margin	2.7%		5.8%		4.7%	1.1%
EBIT margin	-2.9%		0.0%
Adj EBIT margin	2.0%		0.0%
EO	-27.5		0.0		0.0
Analyst(s): [e-mail], [phone]
SEKm	2019	2020	2021e	2022e	2023e
Sales	2,068	2,155	2,373	2,589	2,763
Sales growth (%)	14.2	4.2	10.1	9.1	6.7
EBITDA	149	139	196	221	242
EBITDA margin (%)	7.2	6.4	8.2	8.5	8.8
EBIT adj	76	56	100	118	132
EBIT adj margin (%)	3.7	2.6	4.2	4.5	4.8
Pretax profit	32	9	67	81	93
EPS rep	0.72	-0.04	1.40	1.71	1.96
EPS growth (%)	-3.2	-106.0	3,383.7	22.2	14.5
EPS adj	1.63	1.22	1.95	2.12	2.40
DPS	0.25	0.25	0.25	0.47	0.58
EV/EBITDA (x)	6.8	6.2	6.3	5.4	4.7
EV/EBIT adj (x)	13.3	15.3	12.4	10.1	8.6
P/E (x)	21.9	-326.6	14.0	11.5	10.0
P/E adj (x)	9.6	11.4	10.1	9.3	8.2
EV/sales (x)	0.5	0.4	0.5	0.5	0.4
FCF yield (%)	-3.0	26.6	-5.2	10.0	10.5
Dividend yield (%)	1.6	1.8	1.3	2.4	2.9
Net IB debt/EBITDA	3.3	2.9	2.7	2.2	1.8
Lease adj. FCF yld (%)	-3.0	26.6	-5.2	10.0	10.5
Lease adj. ND/EBITDA	2.1	1.7	1.8	1.4	1.7

14 June 2021

ABG Sundal Collier

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HANZA

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Production of report: 06/14/2021 13:25 CET.

All prices are as of market close on 13 June, 2021 unless otherwise noted.

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ABG Sundal Collier

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HANZA

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14 June 2021

ABG Sundal Collier

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