Q4 sales up 35%, organic growth over 20%

Good performances across all segments

Stock trading at all-time high levels, up >60% YTD

Double-digit organic and M&A growth, EBITA up 40%
Addtech finished the fiscal year in great shape, with Q4 sales of SEK 2,864m (+15% vs. ABGSCe 2,484m). The surprising beat was the 22% organic growth (ABGSCe 5%), with M&A and FX contributing 10% and 3%, respectively. All segments performed strongly over the quarter, with 3 out of 4 growing >30%. Particularly strong was Industrial Process (25% of sales) up 59% y-o-y, with the segment benefitting from strong demand for its marine products. EBITA grew 40%, to SEK 309m (ABGSCe 262m), and the margin for the period was 10.8% (10.4%) largely as a result of the high volume growth. Overall, FY 18/19 was a strong year: sales grew by 26% and EPS of SEK 9.80 was an increase of 28%.

Focus on structural growth trends, and a new segment
We raise estimates for ‘19/’20e & ‘20/’21e by 4% and 3%, respectively, For FY’19/20e, we still expect 15% sales growth (4% organic, 9% M&A, 2% FX). We expect Addtech’s focus on structural growth areas (e.g. green energy, emission control, automation) to support the organic growth, We adjust our margin assumptions slightly and raise EBIT broadly in line with sales. In April, Addtech added Automation as a new segment, comprised of recent acquisition Omni Ray and parts of the Components segment. Automation makes up ~19% of group sales and had a FY ’18/’19 pro forma EBITA margin of 10%. We welcome the clear focus on the automation trend and estimate that we will see more acquisitions in the segment during the year.

Price at all-time high, next 12m EV/EBITA 20% above avg.
The share is up >60% YTD, trading at a ‘19/’20e EV/EBITA of 14.8x (3% above Lagercratnz and 8% and 16% below Indutrade and Lifco, respectively). But, from a 12m forward (FactSet consensus) perspective, the share is trading at a 20% premium to its 5Y average, which is higher than peer levels, with premiums of around
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