Yesterday, Astor announced bullish new mid-term targets and resolved a SEK 150m capital increase to fund further acquisitions. In detail:
Bullish new mid-term targets: As previously flagged, we regarded the old mid-term targets (> SEK 400m sales and > 15% EBITDA margin by FY'26e) as conservative, given the strong recent performance. Now, Astor targets SEK 2.5bn in sales (incl. M&A) and more than 15% EBITDA margin, which is well above our current estimate (eNuW: SEK 586m sales in FY'28e with a 24% EBITDA margin) as we do not model any M&A. Nevertheless, this would imply sales to 10x and EBITDA to at least 20x over the next 4 years, highlighting the enormous growth planned.
Well filled M&A pipeline: Astor has several targets in an advanced stage of discussion whose combined turnover exceeds SEK 500m with an implied EBITDA margin of at least 12%. Given the last 6 acquisitions over the last 15 months (combined turnover of SEK 166m with a 17% EBITDA margin, see p. 2 for details), Astor seems to increase the M&A pace significantly. However, until first deals are signed and thus purchase price multiples become visible, we cannot assess the pipeline's value accretion potential. Nevertheless, we expect Astor to not exceed 8-10x EV/EBITDA, given its recent M&A history (6.3x EV/EBITDA).
Capital increase to fund acquisitions. In order to finance the potential acquisitions, Astor resolved a SEK 150m capital increase, exceeding the original target of SEK 125m, via an accelerated bookbuilding without subscription rights yesterday after market close (6.5m new shares placed at SEK 24 per share). Also, a share of the proceeds is intended to finance growth CAPEX in the form of production capacity. Consequently, Astor should now have a cash position of c. SEK 179m by Q1'25e (vs. SEK 50m at Y/E'24), giving the company a well-filled M&A war chest, in our view. (see p. 2 for details)
In sum, Astor's engines (M&A and organic performance) are running at full speed. Further value-accretive M&A (as evidenced in the last 15 months) soon after the capital increase, should overcompensate the remaining shareholder's dilution, in our view. Therefore, we reiterate our BUY recommendation with an unchanged PT of SEK 30.00, based on DCF.
ISIN: SE0019175274
