Christian Berner Tech Trade: Unleashing its potential - ABG

Decentralised, diversified B2B distribution and original product group
New management aims to boost profitability, promising signs in H1'23
'23e-'25e adj. P/E of 12-10x, fair value SEK 30-40

Overlooked and poorly understood
We think Christian Berner Tech Trade is an overlooked company with limited institutional ownership despite good potential for increased profitability and stable growth, driven by the new management's work to improve efficiency, and a growing demand for high-quality clean energy and water solutions. The company is a decentralised, diversified B2B business group with subsidiaries acting as distributors and sellers of original products in areas such as clean energy, clean water, packaging, process technology and noise reduction. The company has arguably delivered below its potential in recent years, with limited organic growth and low profitability. This is changing, as new management took over in H1'22, and has since been working hard to improve operational efficiency. This is an ongoing process, but promising signs were seen in H1'23, as sales grew 22.5% organically, and order intake remained strong. The EBITA margin was up 2pp y-o-y, and ROE and ROCE were >20%.

Zander & Ingeström: a case study
Earlier this week, we visited one of the group's largest subsidiaries, Zander & Ingeström, acquired in 2018. This company focuses on industrial electrical water boilers and industrial pumps. Both of these segments see significant drivers in the increasingly strict regulations on energy efficiency, workplace safety and environmental sustainability. Since 2009, the company has grown sales at a CAGR of 8%, and averaged an EBIT margin of 12%. Since the acquisition, sales growth has accelerated, reaching a CAGR of 12% during 2018-22, and on average the EBIT margin improved by 2pp. We think it is fair to say this was an excellent acquisition.

Fair value SEK 30-40
Despite its potential, the company is trading at '23e-'25e adj. P/E of 12-10x, 50-40% be.... Läs mer på ABG Sundal Collier

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