Nordic Waterproofing - Improved y-o-y, but below expectations

5% organic sales growth, 3% adj. EBIT growth Adj. EBIT margin expanded from 8. 4% to 8.

6% 13x EV/EBITA ‘21e, c. 7% lease adj. FCF yields Q4 results Sales arrived at SEK 769m (+1% vs.

ABGSCe 758m), +1% y-o-y of which 5% was organic (ABGSCe +3%). EBIT increased 4% y-o-y to SEK 65m (-13% vs. ABGSCe 76m), for a margin of 8.

5% (ABGSCe 9. 9%, 8. 2% in Q4’19).

However, PTP came in a SEK 72m, 14% above ABGSCe on the back of positive SEK 7. 5m in financial income. The positive financial effect is mainly explained by updates on valuation for the options to buy outstanding shares in not wholly owned subsidiaries.

Installation services and Norway was the main reason for the beat vs. our expectations, coming in 6% and 7% above ABGSCe, respectively. NWG continued to gain market shares, with Norway, Denmark and Sweden performing especially well.

Outlook and estimate changes Based on the Q3 report alone, we believe preliminary estimate revisions could amount to low negative single digits revisions on EBIT. For ’19-‘22e, we currently forecast a 2% organic sales CAGR and a 6% adj. EBITA CAGR.

Bitumen prices remain low, and a majority of Q4’20 volumes and 46% of volumes for ’21 is hedged. Final thoughts NWG’s share price return since last report is +21%. On our pre-Q4 estimates, the company is trading at 12.

6x EV/EBITA ‘21e and c. 7% lease adj. FCF yields.

The conference call is at 10:00 CET. Dial in numbers: Sweden: +46 8 505 583 54 UK: +44 33 33 00 92 71.