Original-Research: Scandinavian Astor Group AB (von NuWays AG): Buy

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Original-Research: Scandinavian Astor Group AB - from NuWays AG

04.03.2025 / 09:01 CET/CEST

Dissemination of a Research, transmitted by EQS News - a service of EQS

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The issuer is solely responsible for the content of this research. The

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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

(힭% yoy in Q4 alone), whereas M&A created additional inorganic sales

growth of 125% yoy in FY'24 (ힽ% 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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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss

bestimmter Börsengeschäfte.

Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben

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2094695 04.03.2025 CET/CEST

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