Nexam Chemical - Q2e more in line with Q1 than y-o-y comps - ABG

Q2e: in line with Q1, easy y-o-y comps
We expect Q2 sales of SEK 52m, up 26% y-o-y vs. easy comps. Q2'23 was a quarter with exceptionally low sales as demand abruptly decreased, and we thus think Q2 sales will be more in line with Q1 sales, seeing as the demand trend has turned positive since last year. The cost-savings programme will have taken full effect in Q2, and we forecast adj. EBIT of SEK -1.0m (-9m), for a margin of -1.8% (-22%), vs. the Q1 figure of -2.5%.

Solid trend, likely EBIT positive in H2
We make only minor estimate changes ahead of the Q2 report. Demand and sales are in a positive trend, while costs are being kept under much better control than before. While wind power customers have still to recover, Nexam now has a much broader client portfolio than it did just a year ago, making the company more resilient to demand swings. We believe there is a very good chance Nexam will turn EBIT positive in H2, estimating SEK 2.7m in H2 EBIT, and with significant spare capacity at its production facilities, all that is needed to further increase profitability from there is additional volume.

Trading at 1.4-1.0x EV/Sales, in line with peers
The share has returned 25% L3M (vs. peers -6%, OMXSSMAC +5%) and is currently trading at 1.4-1.0x '24e-'26e EV/Sales, vs. peers at 1.3-0.9x. We maintain our fair value range at SEK 3.0-4.0.

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