Nolato - Upbeat Integrated Solutions guidance

EBITA 3% better than ABGSCe We increase ‘21e-22e EBITA by 2% New fair value range of 800-870/share Numbers relatively in line with expectations Nolato delivered numbers relatively in line with our expectations. Sales were SEK 2,487m, 1% below ABGSCe and 4% below consensus. Medical Solutions was the main culprit behind the slight miss on sales, as it came in 5% below what we expected. The reason is due to the segment’s dependency on elective surgery activity, and increasingly so after the acquisition of GW Plastics, which was low this quarter due to lockdowns.

Group EBITA was SEK 283m (+3% vs. ABGSCe and -2% vs. consensus).

Industrial solutions was the main driver of the solid EBITA performance, and managed to surpass our estimates by 24% and offset the otherwise weak performance in Integrated Solutions (8% miss on EBITA vs. ABGSCe). It is worth highlighting that the EBITA margin came in at 11.

4% and 50bp better than we expected, despite lower volumes. Positive guidance for Integrated Solutions We increase EBITA for ’21e-22e by c. 2%, based on positive guidance for Integrated Solutions at Q1’21e of sales SEK1bn.

Although management is hesitant to provide further guidance, the guidance is c. 4% better than what we expected in Q1, and we extrapolate some of this strength into the rest of ‘21e. However, the ever-deteriorating FX situation puts a wet blanket on our revisions, and we now assume a -5% effect on ‘21e sales.

We also raise our capex assumptions to meet management’s guidance of SEK 600-650m in ’21. Nolato is primarily investing in new Medical Solutions facilities, and should provide capacity for a c. 10% growth runway for some years ahead.

Trading 13% above average, at 17x ‘21e EV/EBITA Nolato is trading at 17x ‘21e EV/EBIT, which is c. 13% above its three-year average. Assuming a fair value of 20x EV/EBITA for Medical solutions and 10x for Industrial, investors are now paying 16x for Integrated Solutions on our ’21e numbers, which is lower than us.