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

Classification of NuWays AG to Scandinavian Astor Group AB

Company Name :	Scandinavian Astor Group AB
ISIN:	SE0019175274
Reason for the research:	Initiation
Recommendation:	Buy
from:	11.02.2025
Target price:	SEK 17.00
Target price on sight of:	12 months
Last rating change:
Analyst:	Henry Wendisch

Target acquired and locked on. Initiating coverage with BUY

With the world's highest PhD ratio per capita in technical and natural sciences, an above average R&D intensity and a unique triangular cooperation between academia, government and industry, Sweden has one on the most sophisticated industrial and defence sectors in the world. The Nordic defense sector is dominated by several large OEMs, such as Saab , BAE Systems , and Kongsberg. However, these major players depend on key components from hundreds of highly specialized and fragmented SMEs (eNuW: >300). Many of those are privately owned, independent businesses with distinct product USPs, but they often lack the defence industry footprint, scale, and organizational professionalism.

Here, Scandinavian Astor Group (Astor), a industrial and defence serial acquirer, shows a strong track record of acquiring hidden champions with above average margins at attractive prices (six acquisitions for SEK 195m at only 6.3x EV/EBITDA at an average 17% EBITDA margin). Astor creates win-win situations and generates value by (1) professionalising operations, (2) qualifiying targets for defence and (3) offering traction and a broad customer network in a market with large entry barriers.

Following its accession to NATO, Sweden has almost tripled its defence spending ('24 vs. '21) and further aims to grow its defence spending by 7% p.a. from '24 ' 30, which implies 2.6% of GDP. The ongoing discussions increase spending to 3% or more, highlights additional growth potential. As tier-1 suppliers, Astor's holdings are positioned in the first part of the value chain, but are in the last phase of the defence growth cycle, meaning that their wave of growing order intake is about to arrive. This should lead to organic sales CAGR of 18% (FY'24-'27e), which is boosted by recent acquisitions to an overall 27% sales CAGR (FY'24' 27e). Group EBITDA should expand disproportionately at a CAGR of 58% (FY'24'-27e) thanks to (1) the acquisition of profitable targets, (2) subsequent operational improvements and (3) an improving fix cost coverage at holding level. Since foundation in 2022, the company is on track to roughly 8x its top-line reaching its guidance of SEK 400m sales until 2026.

In sum, Astor offers an unique opportunity to capture growth and the enormous potential of the Nordic defence sector. Valued at only 11.5x FY'25e EV/EBITDA, c. 50% below relevant peers, the stock offers an attractive entry opportunity. We initiate coverage with a BUY recommendation and PT of SEK 17.00, based on DCF.

You can download the research here: http://www.more-ir.de/d/31725.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 analysierten Unternehmen befinden sich in der vollständigen Analyse.
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