Nordic Waterproofing - Feedback from ABGSC’s Investor day
Demand is holding up in Q1 Focused on acquisitions in 2021 12x ‘21e EV/EBITA, 8x if M&A headroom is utilised Strong demand has continued Today, we hosted Nordic Waterproofing and CEO Martin Ellis at our ABGSC Investor day. Regarding current trading, we have the impression that demand is still high but with limited margin potential as input costs are unlikely to continue decreasing while price-pressure is likely in the near term. We find comments regarding solid demand positive, as we had expectation of an organic decline of 4% in Q1’21e, assuming a demand vacuum after the high activity in 2020. Furthermore, there seems to be no concerns regarding competition as of now, and we expect that the market share gains during the past year should be sustainable.
Entering active acquisition period Martin delivered a confident message with focus on its acquisition agenda. During the past year, it has acquired three companies adding in total 5% growth to ‘21e. During the presentation, Martin mentioned that Nordic Waterproofing is moving into an active acquisition period.
The main targets are within its current non-bitumen business areas, and we got the impression that focus will be on the more sustainable niches within green roofing, wood-based prefab elements, and solar panels. These businesses are mostly regional as of now, and it intends to extend these offerings into other geographical areas where it has a strong foothold (primarily Nordics and Benelux). Could increase EBITA by 45% in ‘21e through M&A We feel confident that the company should be able to maintain 10% EBITA growth over time, mainly supported by M&A.
At the end of ’20, ND/EBITDA stood at 0. 5x, significantly below its upper limit of 3x. If we assume Nordic Waterproofing can acquire at c.
5x EV/EBITDA, an assumed uptick from the historical 3x-4x mentioned in the prospectus, it should have headroom to increase EBITA by c. 45% in ‘21e through M&A. If we assume it would utilise all of the headroom, it i.