Ferronordic
Ferronordic - Feedback from ABGSC Investor Day (ABG Sundal Collier)
2020-05-27 13:16
CFO Erik Danemar provided a general update
Stable demand in Russia/CIS, good aftermarket trend
Strategic possibility to expand further in Germany
Massive infrastructure projects still high on the agendaToday, we hosted a presentation with Ferronordic’s CFO Erik Danemar at our ABGSC Investor Day. In addition to a brief overview of the company, Mr. Danemar focused on recent financial development, the company’s actions to mitigate the COVID-19 impact, and the expansion into Germany. In sum, demand from end-markets such as fertilisers, gold and certain construction segments has held up well, with lower demand seen in coal, oil & gas as well as the German truck market. Looking ahead, Mr. Danemar remained confident in the company’s aftermarket business, that is still seeing good momentum, and demand stemming from the USD 400bn worth in Russian ‘National Projects’. Out of these, USD 400bn, c. USD 175bn relate to roads and infrastructure, that could see some potential delays in the short-term, but is expected to be an important fiscal instrument to boost the Russian economy.
LT ambition to potentially acquire more German dealers
An area we found of interest was Mr. Danemar’s comments regarding Ferronordic’s long-term ambition to potentially expand its German footprint further. The company has seen positive support from Volvo, and this would mainly revolve around acquiring smaller independent multi-brand dealers, where Ferronordic would be able to further expand its newly established footprint and achieve profitability in a few years’ time.
6x PE ‘21e for a resilient business model
Again, Mr. Danemar highlighted the company’s resiliency in preserving profit and cash flow in times when market volumes have declined substantially. Although Ferronordic today has a loss-making German business, and is undertaking certain investment programs, we believe that the company’s resilient aftermarket business should prove it worth again during the current COVID-19 situation. On our estimates, Fe
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