Ferronordic: Yet to grow into its suit - Nordea

We expect a decent Q2 report. While sales are set to grow by nearly 60% y/y, driven by good momentum amid easing supply chain constraints, we still forecast group EBIT of SEK -7m (due to SEK 21m in central costs for the quarter). However, we still forecast a net cash position of SEK 740m by year-end. This could potentially allow for acquiring and building a business of up to SEK 3bn in sales, i.e. larger than its German operations. This based on the P/S ratio of 0.22x it paid for Germany, including its initial losses. We do not rule out Ferronordic entering an 'emerging market' outside Europe, which could carry an even lower acquisition multiple. The share is trading at 12x 2024E EV/EBIT, versus MEKO and Finning that are trading at 7-10x. We calculate a lower multiples-based fair value range of SEK 67-74 (85-97), corresponding to 2024E EV/EBIT of 7-12x. Marketing material commissioned by Ferronordic.

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