Equity research HANZA: Preview Q2, 2023

Carlsquare Equity Research expects HANZA’s Q2 earnings report on July 25 to demonstrate robust organic growth once again. Also, we expect HANZA to be well on track to reaching its profitability target with an EBITA margin on par with Q1.

Following much better-than-expected sales and operating margin in Q1, we expect continued solid organic growth (excluding FX effects) of 19 per cent in Q2, only slightly below the previous period’s rate. While HANZA does not guide on quarterly sales, this aligns with the outlook of around 20 per cent growth for Q2 provided by sector peer NOTE in April. We expect sales to benefit from a solid order backlog.

So far, we have not observed any significant headwinds in the June quarter. HANZA reported in May that orders from the defence industry have doubled to SEK 150m in 2023. However, we anticipate that a reduced number of working days compared to last year will slightly dampen sales and margins in Q2.

We expect a y/y increase in EBITA margin by about 100 basis points, which is relatively stable compared to Q1 (adjusted for electricity subsidies). Our assumption is based on a positive effect from higher volumes.  Also, we forecast better profitability in the Other markets segments and Germany after expansion and coordination programs were completed in the second half of 2022. We have raised our forecast for the quarter slightly based on the recent weakness in the SEK. If our estimates prove correct, HANZA remains well on course to reaching its 2025 financial targets.

During Q2, the 2020/23 options program expired, and management increased its ownership in HANZA from 1.4 to 2.1 per cent. From the options exercised at SEK 20 per share, HANZA has raised some SEK 17m.

In conjunction with the Q1 report, HANZA said, “order intake remains very good in more or less all industries and geographies. Sales and profit development have been limited by the availability of raw materials and components, a situation that has improved during the start of 2023 and is expected to keep improving”.

For detailed estimates for the full year, please see our latest update.

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