Ramp-up of deliveries in H2’22 to Germany

CMD 29 September, we expect updated financial targets

34% ’21-‘24e EBIT CAGR

H2’22 full of exciting events
Q2 was fairly in line with Factset consensus, with the slightly lower than expected EBIT explained by FX losses and revaluation of contingent consideration. All in all, we find it positive that deliveries have commenced to Emtelle and Deutsche Glasfaser in Germany, although still on a small scale. Management says the intention is to ramp up deliveries over H2’22, which will support organic growth going forward. We also note that management says it has additional companies in its M&A pipeline following the acquisition of NWC (see our note from 10 August), something that would enhance the group’s competitive ability further. Finally, management confirmed Alcadon’s first capital markets day on 29 September in Stockholm, at which members of the group’s management team and other key individuals will present the group, its vision, strategy, and financial objectives. We think it is likely that updated financial targets will be presented at the CMD to better reflect the new geographic exposure (European expansion), improved organic growth opportunities and M&A agenda. Alcadon’s current financial growth target is EPS growth of 10% p.a. over a business cycle. We expect the new financial growth target to include acquired growth and be raised to 15-20% annual EBITA growth. This would be in line with other acquisition-driven companies, and the upper boundary is in line with sector peer Hexatronic’s growth target of at least 20% annual growth.

‘23e-‘24e EPS up 26% and 23%, respectively
We have now included the acquisition of NWC in our estimates and thus make rather significant estimate changes. We raise our ‘22e-‘24e sales by 17-54%. Due to NWC being slightly margin dilutive, our ’22e-‘24e EBIT comes up 4-44%. Since the acquisition is partly financed through additional debt of SEK 250m (with interest rate Stibor 3m + 1.4-2.4%) and newly i
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