Ferronordic: Pulls a rabbit out of the hat - ABG

Divests Russian business, SEK 75 cash effect per share
Ferronordic announced today that it divests its Russian business for SEK 1,320m, or SEK 1,090 after paying of debts, which amounts to a postiive cash effect of SEK 75 per share. The money has been deposited in the company's Austrian account (in EUR), and as a result there is no risk that Ferronordic will not be able to access the full amount.

We had put no value on Russia for '23e and beyond
In our SOTP valuation, we had assigned a value to the Russian operations of SEK 32 per share, which we based on applying a target multiple of 1.0x '22e EV/EBIT, putting no value at all on '23e and beyond due to the high uncertainty. Ferronordic will now be entitled to all earnings and cash flows in 2022 (minus one week), and still gets an added SEK 75 per share from the divestment. In sum, this puts a SEK 75 per share cash value to something we had essentially assumed zero value for, and we note that our latest published fair value for the group is SEK 35-55 per share.

What comes next for Ferronordic?
We are still in the dark as to what the SEK 1,090m payment (as well as the prior SEK 321m Volvo CE payment) will be used for. Whether Ferronordic will pay out a major dividend to shareholders or reinvest the proceeds into aggressive growth in new markets remains to be seen, and we expect some info on this in the Q4 report on 17 February.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ferronordic/Equity-research/2022/12/ferronordic---pulls-a-rabbit-out-of-the-hat/