Elanders: Another quarter of delivering on margins - ABG

Adj. EBITA SEK 224m (+25% vs. ABGSCe 179m) Isolated Q2 numbers imply ~5% adj. EBITA upgrades 11x ’22e EV/EBITA (adj.), or 8x lease adj. EV/EBITA Q2 outcome Sales were SEK 3,525m (+12% vs. ABGSCe SEK 3,160m), up 27% of which 4% organic (ABGSCe 0%). Adj. EBITA was SEK 224m (+25% vs. ABGSCe 179m), for a margin of 6.4% (ABGSCe 5.7%), and this excluded a positive NRI of SEK 40m (ABGSCe 50m). Net profit was SEK 143m (+9% vs. ABGSC 131m). The strong results were to a large extent driven by the Fashion & Lifestyle customer segment, which saw strong demand particularly in North America where the Bergen acquisition continues to perform. However, the Automotive and Industrial customer segments continue to struggle, as expected. The group margin target of 7% was exceeded in Supply Chain Solutions (7.3% vs. ABGSCe 6.3%) while Print & Packaging Solutions had softer margins due to high paper prices and supply shortages (3.3% margin vs. ABGSCe 3.9%).

Estimate changes and outlook The Q2 numbers in isolation would imply adj. EBITA upgrades of ~5% for ’22e-’24e. We note, however, that while Elanders says the demand outlook among major customers remains strong, their customers have in turn started flagging for lower demand, which could pose a risk to Elanders further down the line.

Valuation and conf call details On our pre-Q2 estimates, the share is trading at 11x ’22e EV/EBITA (adj.), or 8x lease adj. EV/EBITA, with an estimated ’21-’24e adj. EBITA CAGR of 15%. Finally, Elanders will host a conference call at 09:30 CET, dial-in SE: +46856642754, UK: +443301653641, PIN: 767304. The presentation will be made available on the company’s IR page.

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