Q2 sales +10% vs. ABGSCe

Short-term challenges, better long-term prospects

Sales, EBITA raised 2.4% and 15% for ‘20e respectively

Medtech shows strength in tough quarter
The most challenging quarter is behind us, and HANZA handled it well with sales coming in 10% better than ABGSCe. We believe this is partly due to strong Medtech performance, as HANZA manufactures parts of the highly sought-after ventilators for Getinge. As a response to COVID-19, management initiated restructuring efforts to dampen the impact. These measures burdened the quarter with SEK 27.5m of non-recurring costs, slightly above the 25m previously communicated. Adjusted for NRI, EBITA came in at SEK 14.9m, 72% above our expectations, with the beat mainly driven by higher-than-expected volumes.

COVID-19 a blessing in disguise for HANZA?
Although the worst is probably behind us, the storm has not fully passed. We still expect negative organic growth for H2’20. Industrial activity will remain sluggish, with a gradual recovery back to normal in ’21. However, many organisations wants to move production closer to end-markets on the disruption seen in global supply chains during the quarter (see page 4). This will benefit HANZA in the years to come, enabling growth above the level of its underlying end-markets. To reflect this, we raise our sales estimates for ‘21e-‘22e by 3% for FY growth of 11% and 7%, respectively. Furthermore, additional sales will trickle down to the bottom line, allowing us to raise our EBITA estimates by 15-7% for ‘20e-‘22e.

Fair value range of 12-24 SEK per share
The share is down 14% YTD, trading at 8.5x ‘21e EV/EBIT. We have reviewed our fair valuation range, and updated the methodology (see page 6). The three-scenario model provides a value range of SEK 12-24 per share.

info@introduce.se (Introduce.se)

ABG Sundal Collier - Introduce.se