Q2’20e sales of SEK 509m, adj. EBITA of SEK 9m

’21 estimates and long-term story remain intact

At low end of our value range, trading 8x ‘21e EV/EBITA

Q2’20 expectations
We expect a weak quarter for HANZA, with COVID-19 leaving a significant mark on the group. We make small adjustments to estimates for Q2’20 and expect sales of SEK 509m, flat y-o-y. FX should impact sales negatively by around 2% but the acquisition of RITTER will add around 19% to sales, while we expect lower volumes organically in Q2’20. The lower volume is likely to have dented profitability along with the estimated cost of SEK 25m related to the COVID-19 preventative measures. However, HANZA should have received some governmental support, partly offsetting negative effects. We expect that the adj. EBITA margin will come in at 1.7%, resulting in adj. EBITA of SEK 9m for the quarter. The Q2 report is due on 28 July.

Forecast changes and outlook
It is no surprise that ‘20e is a lost year for the group, where we expect lost sales and margins on the back of the pandemic. We do, however, raise our EBITA estimate by 1%, and 4% on EPS, as Q2 and Q3’20 should be better than our previous assumptions (FY‘20e adj. EBITA margin 3.0%), as well as updated tax assumptions. Looking into ‘21e, we make just minor adjustments at this time and note current estimates reflect a strong recovery in ‘21e. This is supported by, as we have previously highlighted, the potential new customer’s contracts in the aftermath of COVID-19, with the help of MIG and an increasing near-sourcing trend.

Share price view, trading at the low end of fair value range
The share is down 13% YTD and, despite positive developments in the last 90 days, has not fully recovered since the sell-off in early March. The share is trading at 8.3x EV/EBITA on our ‘21e figures, and at 6.1x on our ’22e numbers. The share price is currently in the lower end of our fair value range of SEK 9-24.

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