Vestum: Riding the wave of water investments - ABG

- Q2 report due Monday, 14 July
- Adj. EBITA by 6-5% on '25e-'27e; 5% CAGR '24-'27e
- Trading at 12-8x adj. EV/EBITA on '25e-'27e (5-19% FCFy)

Infrastructure spending to lift growth in H2
We expect that Vestum will continue to deliver positive organic growth and slightly better earnings growth momentum in Q2. We forecast sales of SEK 1,030m, -25% y-o-y (1% organic, 0% FX, -26% M&A) with Flow Technology being the main driver of organic growth. Moreover, with an increased water infrastructure investment plan (AMP8 2025-2030 amounts to ~GBP 90bn vs. AMP7 at ~GBP 50bn) and new nuclear power announced in the UK, we see potential for growth to accelerate further in Flow Technology later this year and remain at good levels for many years. We also believe that the installation market in Sweden has bottomed out and should lead to accelerating growth for Solutions in H2'25 and 2026. We forecast Q2 adj. EBITA of SEK 114m, -14% y-o-y (lowered by divestments and FX) for a margin of 11.0% (9.7%), which benefits from margin-accretive acquisitions in Flow Technology.

Estimate changes
We cut adj. EBITA by 6-5% on '25e-'27e mainly as a result of slightly slower recovery in Solutions and Niched products (-5-8%), which has high exposure to construction, while we make smaller changes to the Flow Technology segment (-2-4%).

Entering a new growth phase
Vestum has now completed its restructuring and is about to enter a new phase of growth, supported by positive developments in its main markets. The balance sheet is in good shape and allows for more acquisitions in the margin-accretive Flow Technology to be completed already in 2025 and support >15% earnings growth in 2026-2027e, in our view. The share is trading at 12x EBITA in 2025e but falls to 9x in 2026e.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/vestum/Equity-research/2025/7/vestum---riding-the-wave-of-water-investments/