Seafire: Feedback from ABGSC investor day – ABG


ABGSC hosted Seafire’s CEO at investor day today
Highlighted development potential in extant businesses.
…and high deal flow

Growth potential in existing companies…
We hosted Seafire’s CEO Johan Bennarsten at today’s ABGSC investor day seminar. Mr. Bennarsten highlighted, among other things, the development potential in existing companies. For example, Bennarsten mentioned Pexymek, acquired in October 2021. Pexymek has had sales of SEK ~45m for the last six years (2015-2020), and its prior owners were not focused on increasing sales of proprietary products (~80% of sales, e.g. antenna mounts and cable protection). Looking ahead, management sees that Pexymek could increase sales from SEK ~45m to SEK 70-80m without any additional capex. The target for ’22e is organic growth of 10%, supported by a solid orderbook. The next step would be to add another salesperson to generate more customer interaction and be more proactive in sales activities.

…and through additional M&A
Besides improving existing customers, a constant focus is to add new companies to the group. Bennarsten mentioned that Seafire looks at more than 50 potential targets each year, and intends to acquire 4-6 companies p.a., slightly above its historical average. Finally, the deal flow is very good and the balance sheet allows for additional acquisitions. With Seafire’s strengthened management team, strong M&A pipeline and ‘22e ND/EBITDA of 1.8x, the company has room to add 15-35% to our ‘22e adj. EBITA estimates, given acquisition multiplies of 6x EV/EBITA and max. leverage of 2.5-3.5x.

12x ‘22e EV/EBITA, 62% ’21-‘24e adj. EBITA CAGR
The share is up 3% YTD and trades at 12x and 10x EV/EBITA ‘22e and ‘23e, respectively. Looking ahead, we estimate a 62% ‘21-‘24e adj. EBITA CAGR, partly driven by the five latest acquisitions, of which four (Pexymek, Bara Mineraler, DOFAB and Kenpo) have been highly margin-accretive. Further acquisitions could add to our estimates.

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