Classification of NuWays AG to Scandinavian Astor Group AB

Company Name:	Scandinavian Astor Group AB
ISIN:	SE0019175274
Reason for the research:	Update
Recommendation:	Buy
from:	04.03.2025
Target price:	SEK 30.00
Target price on sight of:	12 months
Last rating change:
Analyst:	Henry Wendisch

Final Q4 out, gearing up for more; raising est. & PT

Topic: Following Q4 prelims in early Feb'25, Astor released final Q4 results and hosted a bullish earnings call last week. Here are our key takeaways:

Strong top-line momentum. Sales (Q4: SEK 91m; FY: 223m) arrived in line with prelims, however the split between organic and inorganic sales revealed a strong underlying performance: Organic sales expanded by 44% yoy in FY'24 (+160% yoy in Q4 alone), whereas M&A created additional inorganic sales growth of 125% yoy in FY'24 (+171% yoy in Q4'24). Worth highlighting is CFO Wictor Billströms comment, that in an as-if scenario (i.e. in the scenario of the new acquisitions being consolidated for the full year), FY'24 sales would have exceeded SEK 300m, which bodes extremely well for sales visibility into FY'25e &' 26e.

Back to black numbers. Group EBITDA (Q4: SEK 20.6m; FY: 19.7m) rose sharply (vs. SEK 1.5m in FY'23) and drove the group EBITDA margin by 7.1pp yoy to 8.8%, especially carried by the strong Q4 which further improved the holding expenses coverage (SEK 11m in FY'24). Q4'24 alone saw an group EBITDA margin of 23%, a 23pp yoy increase, thanks to the acquisition of Scandiflash. Further, the company also reached a positive bottom line with a net income of SEK 0.4m (vs. SEK -3.6m in FY'23), thanks to the strong Q4 (SEK 13m net income, with a 14% profit margin).

Tech segment is now a second cash cow. The segment report revealed the strong earnings power of last year's acquisitions, with the Tech segment coming from almost no revenues in FY'23 to now 25% of sales in FY'24 and 49% in Q4'24, carried by the acquisitions of Scandiflash and Airsafe. A key highlight is the segment's profitability as EBITDA rose from SEK -6m in FY'23 to now SEK 7.4m in FY'24 (thereof SEK 13.4m in Q4'24), with an 13% EBITDA margin (30% in Q4'24), even exceeding the margins of the Industry segment. - see table on p. 2 -

Industry segment remains in full swing with top line and profitability notably increasing in FY'24. Sales grew by 107% yoy in FY'24 (125% yoy in Q4'24), carried by strong underlying growth and the smaller acquisitions of CDS, Welas and ID Modeller. Therefore, the segment's EBITDA margin increased by 1.3pp in FY'24 to 14.7%, showing that also the Industry segment remains in full swing. - see table on p. 2 -

Upbeat cash generation. OpCF grew to SEK 10.5m in FY'24 (vs. SEK -9.7m in FY'23), mainly driven by the strong Q4 (SEK 16.8m opCF). This corresponds to a 53% cash conversion (opCF/EBITDA) in FY'24 and a staggering 81% in Q4'24. This development bodes extremely for the future, as it lays the foundation to finance future acquisition from opCFs, going forward.

Gearing up for further M&A. During the earnings call, CFO Billström mentioned currently c. 50 targets in the short-list and anticipates Astor 'to keep the pace up', when it comes to further acquisitions. Therefore, we expect further M&A deals in 2025e, however do not include any in our estimates.

Raising estimates. Thanks to the stellar organic sales development visible in FY'24 and especially in Q4'24, our old organic sales growth estimate of 18% in FY'25e (16% in FY'26e) seemed too conservative, in our view. Therefore, we increase our organic sales growth assumption to 24% in FY'25e (20% in FY'26e), which should better reflect Astor's growth path. Also, we raise our group profitability estimates thanks to the strong Tech segment's profitability visible in Q4 (which included Scandiflash as of Q4'24). By simply assuming the Q4'24 EBITDA (SEK 21m) as a run-rate for FY'25 (simply put: SEK 84m), there could be even more upside to our new FY'25e EBITDA estimate of SEK 66m.

Mid-term guidance upgrade in the cards, especially after a potential acquisition. With our new estimate of SEK 447m sales and an EBITDA margin of 21% for FY'26e, we are already positioned well above the mid-term guidance (see bottom right), even without future M&A. Any new acquisition that follows, should thus lift our estimates even further, which could trigger a guidance upgrade in the next quarters, in our view.

First foothold in the German market. Moreover, Astor reported a first order via its newly founded sales channel for the German market called 'Astor Group Deutschland GmbH'. The order comprises Scandiflash service parts and is not financially significant, but it shows a first business development step into the German defence market, which is seeing strong demand for technologically advanced defence product for years.

Volatile newsflow, but stable demand for years. Currently, there is volatile newsflow regarding the Ukraine war in terms of US/EU support, a potential ceasefire, peace and new NATO or national defence spending discussions. While defence stocks typically react volatile to that kind of newsflow, the fundamental rise in defence spending is here to stay. Therefore, potential share price drops should present attractive buying opportunities, in our view.

Against this backdrop, we strongly reiterate our BUY recommendation and increase our PT to SEK 30.00 (old: SEK 17.00), based on DCF.

You can download the research here: http://www.more-ir.de/d/31893.pdf
For additional information visit our website: https://www.nuways-ag.com/research-feed

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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