Christian Berner Tech Trade - Headroom for accelerated growth

Nordic tech trading company with M&A opportunities ‘19-‘22e EBITA CAGR of c. 9% Fair valuation range of SEK 26-42 per share Exposure to megatrends paves the way for growth Christian Berner Tech Trade (CBTT) is a Nordic-based technology that has grown its EBITA by c. 25% p. a.

since 2011. The group contains 11 companies with exposure to end-markets such as the processing, construction and infrastructure sectors. These sectors are characterised by a continual need for investment, new regulations and constant efficiency improvements.

CBTT holds a strong position in areas such as electrification, urbanisation and water treatment, where we believe it is positioned for order intake growth and higher market shares. We also argue that the company’s offering has strengthened substantially after the acquisition of Zander & Ingeström, in 2018. Finally, we see more earnings growth potential if the company 1) increases its order intake, 2) improves margins and/or 3) executes on more profitable/margin-accretive acquisitions.

We estimate an EBITA CAGR of 9% ’19-’22e In ‘16-‘19, CBTT grew its EBITA at a CAGR of c. 28% through a combination of organic growth and margin-accretive acquisitions. In the same period, the margin expanded from 5.

9% to 7. 5%. Looking ahead, with CBTT’s ‘20e ND/EBITDA of 1.

1x, we believe it has plenty of headroom to accelerate its M&A activity. We forecast the company will grow at an EBITA CAGR of c. 9% in ’19-22e, supported by resilient end-markets and a higher order intake.

Fair value range of SEK 26-42 per share In this report, we analyse comparable distribution and Nordic M&A companies. Based on our findings, our view of CBTT’s end-markets and our sum-of-the-parts (SOTP) weighted relative approach, we arrive at a fair valuation range of SEK 26-42 per share. This value is most sensitive to margins and the amount of M&A, with the main risks including inflated acquisition multiples and stagnant margins.