Nolato: Component issues to persist in H1’22e – ABG

Q1 report due on Tuesday, 3 May
’22e-’24e adj. EBITA down 14-5%, mostly from H1’22e
15x ’22e EV/EBITA, fair value SEK 80-120 (90-130)

Headwinds from component issues and plastic prices
Nolato issued a press release on 24 March stating that Q1 sales will be ~SEK 2.7bn (-14% vs. ABGSCe) with an EBITA margin of 9% (ABGSCe 11.0%), resulting in an EBITA of SEK 243m (-29% vs. ABGSCe). We have now revised our Q1 estimates accordingly. The company also disclosed that all segments will see fairly flat y-o-y growth, meaning that the main deviation on sales was from the Integrated Solutions segment where the previous guidance was for ~40% y-o-y growth; Medical Solutions sales were also 6% below our expectations. The deviation on Integrated Solutions was driven by forced production stops due to a shortage of electrical components needed for vaporiser heating products, while the smaller miss on Medical Solutions was from lower demand in IVD sales on high customer inventory levels. Lower sales led in turn to suboptimal capacity utilisation, hurting margins (mostly affects Industrial and Medical Solutions, as Integrated Solutions has less fixed costs and is therefore less dependent on capacity utilisation). Also, rising plastic prices have a 3-6-month lag before they can be moved on to customers.

Issues to persist in Q2’22e, gradual improvements in H2’22e
We lower our adj. EBITA estimates by 14% for ’22e and by 5% for ’23e-’24e, on the assumption that Q2’22e will be affected to a similar degree by component shortages as Q1. In Integrated Solutions, the biggest effect is from lowered sales, while for Medical and Industrial Solutions it is from lowered margins. After Q2’22e, we expect a gradual recovery to commence.

Trading at 15x ’22e EV/EBITA, 18% ’22e-’24e EBITA CAGR
On our estimates, the share is currently trading at 15x ’22e EV/EBITA with an estimated ’22e-’24e EBITA CAGR of 18%. Once the current issues subside, we expect Medical and Integrated Solutions will return to double-digit or

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