Nolato: VHP continues to struggle in Q2 - ABG

Q2 report due on Wednesday, 20 July
Adj. EBITA lowered by 5-3% for ’22e-’24e Trading at 14-11x ’22e-’24e EV/EBITA (adj.) Medical remains stable, but issues persist in other segments We expect Q2 sales of SEK 2.6bn, down 8% y-o-y (-10% org, +2% FX, 0% M&A). Nolato has guided for a weak Q2 in Integrated Solutions (ABGSCe -26% org. growth) given the lost sales from vaporiser heating products (VHP) from Eastern Europe in addition to the prior issues with component shortages. Medical Solutions, however, is driven by separate factors, and we expect a better development. With the peak of the pandemic behind us, elective surgeries should return, perhaps also with a demand backlog, and after a weak Q1 for IVD, we argue there should be more positive re-stocking effects in Q2. We expect adj. EBITA of SEK 234m, for a margin of 9.1% (12.1%). While margins in Industrial and Medical are heavily reliant on high and stable capacity utilisation, costs can be more easily scaled up or down in Integrated, meaning that margins in the segment should hold up relatively well despite the lower volumes.

Adj. EBITA estimates lowered in Integrated and Industrial For the Integrated and Industrial Solutions segments, we lower estimates on a more cautious view of a component issue recovery and on demand likely slowing. In Medical, we make only minor adjustments, which at the group level amounts to 5-3% lower adj. EBITA estimates for ’22e-’24e.

News on dual-sourcing VHP expected after the summer On the lowered estimates, as well as an increasing risk of further curbed consumption in a weaker macro-environment, we lower our fair value range to SEK 50-90 (60-100). On our estimates, the share now trades at 14x ’22e EV/EBITA (adj.). As a reminder, Nolato has said it expects to be able to give more concrete information after the summer on the financial impacts of its VHP customer dual-sourcing production, which it announced could happen in the Q1 report. Since then, the consensus group adj. EBITA has come down ... Läs mer på ABG Sundal Collier

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