Informational Capital Markets Day on 19 September

Focus on sustainable growth trends and strategy

Expect share price neutral event with reiterated targets

Hosting first ever CMD, focus on structural growth trends
Addtech will host its first ever CMD at the company head office in Stockholm on 19 September. The event will be led by CEO Niklas Stenberg and will cover the general business model as well as deeper dives into strategy, market potential and an introduction of the new management team. We anticipate that focus will be given to discussions surrounding structural growth trends (such as emissions reductions, automation and renewable energy) and the overall potential in a weaker economic climate. As Addtech is considered largely cyclical with a heavy Nordics industrial tilt, a softer outlook coupled with the YTD share price rally is making investors cautious about the stock. We also anticipate a more detailed look at the company’s own products and brands (35% of sales) and their role in the strategy going forward.

Likely to reiterate financial targets
We expect that Addtech will reiterate current long-term targets of >15% earnings growth, >45% return-on-working capital and >30% pay-out-ratio, over the business cycle. In the last five years, growth has been on average 15% (adjusted for Addlife). In FY’16/17 Addtech lowered its pay-out target from 50% to 30%. While we note that the pay-out-ratio has remained above 50% each year, we think it is unlikely to be raised.

Share price up >75% YTD, trading 18% above its 5y avg.
The share is up 77% YTD, trading at 16x ‘19e EV/EBITA, which is 7% below its main peers (Indutrade, Lifco and Lagercrantz). Still, on a NTM basis, Addtech is trading 18% above its five-year-average. Within the multiple compounder space, Addtech is seen as one of the more cyclical names, which has been one of the main concerns among investors. We expect the CMD will aim to ease those concerns.

info@introduce.se (Introduce.se)

ABG Sundal Collier - Introduce.se