Hanza: Record margin to be expected - ABG
This is a third party research report and does not necessarily reflect our views or values
Q2’21 expectations up following increased guidance
Hanza announced improved guidance on Monday, 14 June, ahead of the Q2’21 report. The company expects at least SEK 600m in Q2’21 sales and SEK 35m in EBITA, driven by a strong underlying market, which is benefitting both Key Markets and Other markets. This implies an EBITA margin of ~5.8%. We estimate Q2’21 sales of SEK 625m, up ~12% y-o-y (8% organic, 7% M&A and -3% FX) and an adj. EBITA of SEK 36m, corresponding to an adj. EBITA margin of 5.8% (2.7%).
Forecast changes and outlook
We expect the strong market momentum to continue for full-year 2021, and thus raise ‘21e sales 1%, however, partly offset by updated FX forecasts. Simultaneously, we raise ‘21e EBITA by 14% following the increased guidance of a record-high EBITA margin of 5.8% in Q2’21. For both ‘22e and ‘23e, we raise sales by 2%, and EBITA by 6% and 3%, respectively. The latter is a consequence of higher sales and margin assumptions for ‘22e-‘23e. The expected margin improvement is supported by strong macro data indicating solid order intake, driving demand from customers, combined with recent years reorganisation of branches and strengthened cluster strategy through M&A.
Trading at 10x ‘22e EV/EBITA and 9% FCF yield ‘22e
The share is up 66% YTD, reflecting the positive company developments and strong market momentum. Hanza is currently trading at 10x ‘22e EV/EBITA on our updated estimates, while offering a lease adj. FCF yield of 9% ‘22e-‘23e. We update our fair value range to SEK 22-34 per share (15-25), in line with our estimate revisions.
Hanza announced improved guidance on Monday, 14 June, ahead of the Q2’21 report. The company expects at least SEK 600m in Q2’21 sales and SEK 35m in EBITA, driven by a strong underlying market, which is benefitting both Key Markets and Other markets. This implies an EBITA margin of ~5.8%. We estimate Q2’21 sales of SEK 625m, up ~12% y-o-y (8% organic, 7% M&A and -3% FX) and an adj. EBITA of SEK 36m, corresponding to an adj. EBITA margin of 5.8% (2.7%).
Forecast changes and outlook
We expect the strong market momentum to continue for full-year 2021, and thus raise ‘21e sales 1%, however, partly offset by updated FX forecasts. Simultaneously, we raise ‘21e EBITA by 14% following the increased guidance of a record-high EBITA margin of 5.8% in Q2’21. For both ‘22e and ‘23e, we raise sales by 2%, and EBITA by 6% and 3%, respectively. The latter is a consequence of higher sales and margin assumptions for ‘22e-‘23e. The expected margin improvement is supported by strong macro data indicating solid order intake, driving demand from customers, combined with recent years reorganisation of branches and strengthened cluster strategy through M&A.
Trading at 10x ‘22e EV/EBITA and 9% FCF yield ‘22e
The share is up 66% YTD, reflecting the positive company developments and strong market momentum. Hanza is currently trading at 10x ‘22e EV/EBITA on our updated estimates, while offering a lease adj. FCF yield of 9% ‘22e-‘23e. We update our fair value range to SEK 22-34 per share (15-25), in line with our estimate revisions.