Research Update HANZA (German)

Research Update Hanza, Q1 2022: Strong growth in extraordinary times

12 maj 2022

Read the full research update below:

Update HANZA Q1 2022, 12 May


Analysis HANZA

The robust growth for contract manufacturer HANZA continues and especially sales in the Main markets segment (i.e., Sweden, Finland and Germany) surprised us on the upside. Margins lagged our expectations, but we see improvement as short term headwinds abate. We make minor adjustments to our earnings estimates and raise our base case to some SEK 47 (44) as the relative valuation has become even more supportive.

Clustered advantages

HANZA is a contract manufacturer founded in 2008 that has successfully built six regional manufacturing clusters in Europe and China through organic growth and acquisitions in, e.g., sheet metal processing, heavy mechanics, and electronics. It boasts several large European industrial groups among its customers.

Strong growth momentum

HANZA delivered 45 per cent growth in Q1’ 22. Hence the strong momentum from H2 2021 continues. Demand for European contract manufacturing, especially electronics, is buoyant, although sales are also boosted by price inflation in raw materials. Sales growth exceeded our expectations by 16 p.p. despite our estimates being above consensus. We are encouraged that the Main markets segment is now growing faster than Other markets and that a recovery in the critical German market is a significant driver. That provides further validation to HANZA’s expansion strategy. We raise our sales estimates by six per cent following the top-line beat.

Room for margin improvement as headwinds abate

Despite better sales, operating earnings fell somewhat short of our forecast. Operating leverage was hampered by capacity constraints (worsened by covid)  and heightened costs in Other markets, and a negative impact from newly acquired Beyers in Germany in Main markets. However, we expect completed expansion programs in Other markets and strong demand to contribute to margin improvement, in line with the company outlook, from Q2 onwards. While we believe the strong sales support our EBITA estimates, higher interest rates lead to a minor reduction (-6 per cent) in our FY 2022 EPS forecast.

Higher sector valuation trumps interest rates

Since we initiated coverage at the beginning of March, valuations in the Nordic contract manufacturing space have generally recovered somewhat. Hence, while we lower our DCF valuation range slightly due to higher interest rates and WACC, our combined DCF and multiple valuation render a higher base case fair value of SEK 47.3 (44.2) Besides relative low valuation multiples, e.g., PE 22E at 12.3x, we expect continued good sales and earnings momentum to drive the shares higher in the coming quarters


Disclaimer

Carlsquare AB, www.carlsquare.se, hereinafter referred to as Carlsquare, is engaged in corporate finance and equity research, publishing information on companies and including analyses. The information has been compiled from sources that Carlsquare deems reliable. However, Carlsquare cannot guarantee the accuracy of the information. Nothing written in the analysis should be considered a recommendation or solicitation to invest in any financial instrument, option, or the like. Opinions and conclusions expressed in the analysis are intended solely for the recipient.

The content may not be copied, reproduced, or distributed to any other person without the written consent of Carlsquare. Carlsquare shall not be liable for either direct or indirect damages caused by decisions made on the basis of information contained in this analysis. Investments in financial instruments offer the potential for appreciation and gains. All such investments are also subject to risks. The risks vary between different types of financial instruments and combinations thereof. Past performance should not be taken as an indication of future returns.

The analysis is not directed at U.S. Persons (as that term is defined in Regulation S under the United States Securities Act and interpreted in the United States Investment Companies Act of 1940), nor may it be disseminated to such persons. The analysis is not directed at natural or legal persons where the distribution of the analysis to such persons would involve or entail a risk of violation of Swedish or foreign laws or regulations.

The analysis is a so-called Assignment Analysis for which the analysed company has signed an agreement with Carlsquare for analysis coverage. The analyses are published on an ongoing basis during the contract period and for the usually fixed fee.

Carlsquare may or may not have a financial interest with respect to the subject matter of this analysis. Carlsquare values the assurance of objectivity and independence and has established procedures for managing conflicts of interest for this purpose.

The analysts Niklas Elmhammer and Fredrik Nilsson do not own and may not own shares in the analysed company.

 

Team

Bild av Jessica Algner
Jessica Algner

Assistant

Telefon: +49 30 809 33 47-12

LinkedIn

@

Bild av Polina Amini
Polina Amini

Senior Associate

Telefon: +49 40 300 836-14

LinkedIn

@

Bild av Jonatan Andersson
Jonatan Andersson

Equity Analyst

Telefon: +46 70 508 00 51

LinkedIn

@

Bild av Markus Augustsson
Markus Augustsson

Head of Equity Research

Telefon: +46 76 235 03 20

LinkedIn

@

Bild av Agata Barsallo
Agata Barsallo

Office Management & Accounting

Telefon: +44 20 8017 6020

@

Bild av Amelie Beier
Amelie Beier

Business Development

Telefon: +44 794 152 7337

@

Bild av Caroline Berglund
Caroline Berglund

Head of Equity Sales

Telefon: +46 73 382 10 82

LinkedIn

@

Bild av Anders Bo
Anders Bo

Managing Partner

Telefon: +45 4199 8252

LinkedIn

@

Bild av Ulf Boberg
Ulf Boberg

Senior Advisor Life Sciences

Telefon: +46 73 312 44 90

LinkedIn

@

Bild av Kai Calli
Kai Calli

Associate

Telefon: +49 30 809 33 47 27

@

Bild av Alex Carré de Malberg
Alex Carré de Malberg

Managing Partner

Telefon: +33 7 81 23 2791

@

Bild av Manfred Drax
Manfred Drax

Partner

Telefon: +49 89 255 49 53-15

LinkedIn

@

Bild av Anders Elgemyr
Anders Elgemyr

Managing Partner

Telefon: +46 70 496 18 15

LinkedIn

@

Bild av Niklas Elmhammer
Niklas Elmhammer

Senior Equity Analyst

Telefon: +46 70 898 39 59

LinkedIn

@

Bild av Sebastian Fischer
Sebastian Fischer

Director

Telefon: +49 89 255 49 53-12

LinkedIn

@

Bild av Daniel Garlipp
Daniel Garlipp

Managing Partner

Telefon: +49 40 300 836-19

LinkedIn

@

Bild av Philip Goldhahn
Philip Goldhahn

Vice President

Telefon: +49 40 300 836-21

LinkedIn

@

Bild av Thorsten Grandt
Thorsten Grandt

Vice President

Telefon: +49 30 809 33 47-20

LinkedIn

@

Bild av Johan Heigard
Johan Heigard

Vice President

Telefon: +46 70 246 99 88

LinkedIn

@

Bild av Caroline Heintz
Caroline Heintz

Senior Associate

Telefon: +46 707 40 68 58

@

Bild av Maurice Hinrichs
Maurice Hinrichs

Associate

Telefon: +49 40 300 836-20

LinkedIn

@

Bild av Arnold Holle
Arnold Holle

Managing Partner

Telefon: +44 20 80176020

LinkedIn

@

Bild av Lars Johansen
Lars Johansen

IT&Telecom Expert

@

Bild av Amanda Kavand
Amanda Kavand

Associate

Telefon: +46 73 0624773

@

Bild av Elaine Kelly
Elaine Kelly

Head of Marketing

Telefon: +49 40 300 836 18

LinkedIn

@

Bild av Anna-Lena Kickbusch
Anna-Lena Kickbusch

Assistant to CFO

Telefon: +49 40 300 836 10

LinkedIn

@

Bild av Morten Kjærulff
Morten Kjærulff

Partner

Telefon: +45 2634 9031

LinkedIn

@

Bild av Mischa Krause
Mischa Krause

Director

Telefon: +49 40 300 836-24

LinkedIn

@

Bild av Johann Kühns
Johann Kühns

Associate

Telefon: +49 30 809 33 47 11

LinkedIn

@

Bild av Steffen Leckert
Steffen Leckert

Managing Partner

Telefon: +49 89 255 49 53 26

LinkedIn

@

Bild av Erik Lundberg
Erik Lundberg

Partner

Telefon: +46 73 850 35 59

LinkedIn

@

Bild av Eva Macha
Eva Macha

Office Management & PA to Michael Moritz

Telefon: +49 30 809 33 47-10

LinkedIn

@

Bild av Mandy May
Mandy May

Head of Operations

Telefon: +49 30 809 33 47 16

LinkedIn

@

Bild av Mirja Meyer
Mirja Meyer

Office Management & Accounting

Telefon: +49 40 300 836 10

@

Bild av Mark Miller
Mark Miller

Managing Partner

Telefon: +49 40 300 836-11

LinkedInXING

@

Bild av Saman Mischler
Saman Mischler

Vice President

Telefon: +49 892554953-24

@

Bild av Michael Moritz
Michael Moritz

Managing Partner

Telefon: +49 30 809 33 47-13

LinkedIn

@

Bild av Bertil Nilsson
Bertil Nilsson

Senior Equity Analyst

Telefon: +46 70 434 90 03

LinkedIn

@

Bild av Emanuel Onoszko
Emanuel Onoszko

Associate

Telefon: +46 763 20 66 12

@

Bild av Flemming C. Pedersen
Flemming C. Pedersen

Senior Advisor

Telefon: +45 4199 8251

LinkedIn

@

Bild av Anika Schaefer
Anika Schaefer

Office Management & HR

Telefon: +49 89 255 495 310

@

Bild av Alexander Schleppegrel
Alexander Schleppegrel

Associate

Telefon: +45 2621 0543

LinkedIn

@

Bild av Nico Schmidt-Weidemann
Nico Schmidt-Weidemann

Managing Partner

Telefon: +49 89 255 49 53-17

@

Bild av Dennis Schober
Dennis Schober

Associate

Telefon: +49 89 2554953-28

@

Bild av Finn Sperber
Finn Sperber

Associate

Telefon: +49 40 300 836 26

@

Bild av Berthold Stauffenberg
Berthold Stauffenberg

Managing Partner

Telefon: +33 6 8008 6786

@

Bild av Caspar Graf Stauffenberg
Caspar Graf Stauffenberg

Managing Partner

Telefon: +49 89 255 49 53-11

LinkedIn

@

Bild av Griffin Steele
Griffin Steele

Associate

Telefon: +44 7517 107 306

@

Bild av Robert Suhr
Robert Suhr

Associate

Telefon: +49 40 300836-27

@

Bild av Jon Tingling
Jon Tingling

Vice President

Telefon: +44 77 1347-8286

LinkedIn

@

Bild av Anshul Tyagi
Anshul Tyagi

Associate

Telefon: +44 7721 664 737

@

Bild av Sybille de Vegvar
Sybille de Vegvar

Business Development

Telefon: +44 20 8017 6017

@

Bild av Oskar Wollert
Oskar Wollert

Vice President

Telefon: +46 761 71 11 60

@

Bild av Mindaugas Yla
Mindaugas Yla

Associate

Telefon: +49 40 300 836-290

@

Bild av Jan-Frederik Zapp
Jan-Frederik Zapp

Associate

Telefon: +49 30 8093347-31

LinkedIn

@

Bild av Nils Zettelmeyer
Nils Zettelmeyer

Director

Telefon: +49 30 809 33 47-25

LinkedIn

@

Bild av Andreas Zetzsche
Andreas Zetzsche

Partner

Telefon: +49 30 809 3347 33

@

Bild av Aobo Zhang
Aobo Zhang

Senior Associate

Telefon: +44 20 8017 6020

@

Bild av Marta Zientarski
Marta Zientarski

Vice President

Telefon: +46 73 840 55 66

@