Ferronordic: Milestone reached in Germany - Nordea

Ferronordic reported a soft Q1, in our view, despite being profitable in Germany for the first time, which is important for the valuation going forward. This was explained by opex being higher than expected and the net cash position declining by 29% q/q to SEK 680m owing to a working capital buildup. We cut our 2024-25 EBIT estimates by 12-17% to reflect the higher opex, as management was clear at the conference call that instead of cutting opex heavily after exiting Russia, it will work to add revenue (new markets and product areas, likely together Volvo). We now forecast a small group EBIT loss in 2023, but positive EBIT of SEK 54m in 2024. The share is trading at 9x 2024E EV/EBIT, versus MEKO's and Finning's 2024E multiples of 8-9x. We lower our multiples-based fair value range to SEK 85-97 (87-105), corresponding to an EV/EBIT of 7-10x for 2024E. Marketing material commissioned by Ferronordic.

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