Hanza - Reversed profit warning

Expects sales of more than SEK 600m, ABGSCe 629m Expects EBITA of more than SEK 35m, ABGSCe 29m EBITA more than 19% better than expectations Record-high margins Hanza has issued a reversed profit warning ahead of the Q2’21 report. It expects at least SEK 600m in sales, compared to ABGSCe at SEK 629m. It mentions that the underlying market development has been strong, and that both Key Markets and Other markets has benefitted. Impressively, it expects that EBITA will surpass SEK 35m, which is at least 19% better than ABGSCe.

It mentions that it expects the margin to be c. 5. 8%, we expected 4.

7%. This is a new record-high margin, with previous high of 5. 0% and close to its target of having an operating margin above 6% over a cycle.

Strong signal for the rest of the year Hanza has reorganized its branches and improved its cluster strategy through M&A over the past year, and it is beginning to show through higher margins now that the underlying market is displaying a strong momentum. Macro data is still showing a solid order intake which should mean that demand should be on a good level throughout the year, and that Hanza should be able to continue to showcase a high margin. We currently expect Hanza to reach an EBITA margin of 5.

3% in 2023, which then implies an EBITA CAGR of 46% between ’20-‘23e. On that margin assumption, Hanza is trading at 7x EBITA ‘23e (SEK 22/share) with 9% FCF yield. Strong performance YTD HANZA is up 58% YTD and is on our estimates trading on EV/EBITA ‘21e of 11x.

We are seeing strategic initiatives playing out, delivering higher margins.