Q4 report due on Tuesday, 15 February

We leave our adj. EBITA estimates unchanged

11x ’22e EV/EBITA (adj.), fair value SEK 35-55 (28-45)

Q4: Strong organic growth in both segments
We expect Q4 sales of SEK 642m, up 30% y-o-y (16% organic, 14% M&A, 0% FX). We expect strong growth within Main Markets (49% y-o-y, of which 22% is organic) against a weaker Q4’20 and an adj. EBITA margin of 7.8% (4.3% in Q4’20, 9.4% in Q3’21). We note, however, that the consolidation of Helmut Beyers from November adds an estimated ~SEK 33m in revenues to Main Markets, which are not yet profitable, implying that the Q4 adj. EBITA margin for the rest of the segment is 8.5%. In Other Markets, we expect 10% organic growth and an adj. EBITA margin of 4.3%. At the group level, this amounts to adj. EBITA of SEK 40m for a margin of 6.2% (3.3%). The significant y-o-y margin uptick is attributable to the operational improvements made by HANZA during 2021, when we saw the margin-accretive effects of the company’s cluster strategy play out. We believe there is some more ground to gain in this area in the coming years as HANZA continues to flesh out and improve its clusters through acquisitions such as Helmut Beyers.

Adj. EBITA estimates unchanged, NRIs affecting rep. EBITA
We make no revisions to our adj. EBITA estimates. However, management has flagged a few non-recurring items (a positive NRI of SEK 6m in addition to the SEK -10m NRI included in our previous estimates), which affects reported EBITA in Q4’21e.

2021 establishes a track record of margin expansion
On our current estimates, the share is trading at 11x EV/EBITA (adj.), with expected ’21e-’23e adj. EBITA growth of 17%. We argue that the case for HANZA’s margin expansion journey has been somewhat de-risked following a period of strong operational performance and successful implementation of the aforementioned cluster strategy. As such, we raise our fair value range to SEK 35-55 (28-45) per share.

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