Prevas - Continuing its selective M&A strategy - ABG

Acquires two companies, adding SEK 78m in sales ‘23e sales up ~6% and EBITA up 4% Demand within industry automation remains strong Acquisitions add SEK 78m in sales and 5m in EBITA in ‘23e Prevas announced two acquisitions in early November, namely Koteko AB and Myra Industriell Design AB (Myra). Koteko AB also owns 80% of the company Koteko Installation AB and its CEO is also included in the deal, whereas management for Koteko AB is not part of the deal. Both Koteko companies are active in industrial automation, whereas Myra excel has won several international design prizes for its services. The former two companies are located in Västerås, where Prevas has its head office, and Myra is located in Stockholm. In total, the acquisitions add SEK 78m in sales and SEK 5m in EBITA for ‘23e. The reason for the slightly diluted EBITA margin is because of profitability issues at Koteko AB. Prevas thinks the situation at Koteko AB is similar to where it was itself 3-4 years ago, with skilled engineers and well-known customers, but with room for improvement on the internal efficiencies. One turnaround and one with design excellence We think the logic behind the deals is first to perform a similar turnaround of Koteko AB to what Prevas recently went through, with a focus on improving the profitability as a first step. Koteko Installation AB on the other hand, will be a completely different story where a skilled CEO will get additional support under the Prevas umbrella and there will be upselling potential to its existing customers. In addition, Myra has been acquired because it adds something that Prevas currently lacks, with its renowned design excellence. Through Myra, Prevas can come in earlier in the design phase and create an even better customer relationship. New fair value range of SEK 109-152 (100-146) We increase our fair value range to reflect estimate changes, higher peer multiples and a slightly less pessimistic second DCF scenario. We also note that Prevas has r ... Läs mer på ABG Sundal Collier