Nordic Waterproofing: Price increases driving organic growth - ABG

Q2 fairly in line with our expectations Estimates intact on isolated numbers 8.6x f12m EV/EBIT, 16% below L5Y avg Q2 results
NWG delivered a Q2 fairly in line with our expectations. Sales were SEK 1,255m (0% vs. ABGSCe 1,255m), up 18% y-o-y whereof 11% organic (ABGSCe 12%). Adj. EBIT was SEK 180m (-3% vs. ABGSCe 186m), corresponding to a margin of 14.4% (ABGSCe 14.8%), down 0.6 pp y-o-y. The org growth of 11% was driven by 13% price increases while volumes were down 2%. All in all, the Product & Solutions segment delivered in line with our expectations whereas the Installation Services segment was slightly softer. OCF was soft at SEK 38m (114m) due to build up in working capital. However, its balance sheet remains strong with ND/EBITDA R12m of 1.7x at the end of the period.

Estimate changes and outlook Estimates should remain fairly intact on isolated numbers. Within a relatively fluid macro environment, management is seeing a stabilization of input costs and additional signs of somewhat slower construction demand. However, it has been able to increase its market share in most of its business units, according to management.

Final thoughts The share is down 36% YTD (vs. OMXSGI -27%) and trades at 8.6x f12m EV/EBIT, 16% below its 5Y average of 10.2x. More information expected at conference call at 10:00 CEST. Dial in: SE +46 8 50 51 63 86, UK +44 20 31 98 48 84.

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