Boreo: Overall market demand has likely remained stable in Q1 - Nordea

Ahead of Boreo’s Q1, due on 5 May, we maintain our estimates intact. The overall market demand has likely remained stable with variation within business areas. We model Q1 sales up 26% y/y, driven by acquisitions (we expect +1% y/y LFL growth). We forecast 57% y/y adjusted EBIT-ex PPA growth and 100bp y/y higher margin. In Electronics, we believe the end-market demand has remained solid, although we note uncertainties related to the timing of sales, especially within Signal Solution Nordic where Q4 sales development was clearly better than the company had expected. We model Electronics sales up 38% y/y, driven by 35% y/y growth through acquisitions.

We expect Electronics adjusted EBIT-ex PPA margin to improve to 7.1% (5.8% in Q1 2022). For Technical Trade, we model 28% y/y sales growth of which 31% through acquisitions. We believe that Machinery’s power business has continued with a strong performance, while soft construction market has likely started to burden construction related sales and margins. We model Technical Trade adjusted EBIT-ex PPA to be up 33% y/y with 30bp y/y margin improvement. In Heavy Machines, we expect the company to give more clarity over the timing of exit from SANY operations in Finland and Sweden (we expect final exit during Q2).

Boreo should be able to release couple of million euros of capital from its SANY business which then could be reinvested into e.g. acquisitions, we believe. For Q1, we mode 7% y/y growth for Heavy Machines, driven by improving availability and a healthy backlog. We expect EUR 0.2m adjusted EBIT from Heavy Machines in Q1 (up from EUR 0.1m a year ago). For Q1, we are 1% ahead of Refinitiv consensus on sales. On adjusted EBIT ex-PPA, we are 24% ahead of consensus, although we note lowquality of the consensus.

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