Main menu button

Research Update Hanza, Q1 2022: Strong growth in extraordinary times

12 May 2022

Read the full research update below:

Update HANZA Q1 2022, 12 May

Analysis HANZA

The robust growth for contract manufacturer HANZA continues and especially sales in the Main markets segment (i.e., Sweden, Finland and Germany) surprised us on the upside. Margins lagged our expectations, but we see improvement as short term headwinds abate. We make minor adjustments to our earnings estimates and raise our base case to some SEK 47 (44) as the relative valuation has become even more supportive.

Clustered advantages

HANZA is a contract manufacturer founded in 2008 that has successfully built six regional manufacturing clusters in Europe and China through organic growth and acquisitions in, e.g., sheet metal processing, heavy mechanics, and electronics. It boasts several large European industrial groups among its customers.

Strong growth momentum

HANZA delivered 45 per cent growth in Q1’ 22. Hence the strong momentum from H2 2021 continues. Demand for European contract manufacturing, especially electronics, is buoyant, although sales are also boosted by price inflation in raw materials. Sales growth exceeded our expectations by 16 p.p. despite our estimates being above consensus. We are encouraged that the Main markets segment is now growing faster than Other markets and that a recovery in the critical German market is a significant driver. That provides further validation to HANZA’s expansion strategy. We raise our sales estimates by six per cent following the top-line beat.

Room for margin improvement as headwinds abate

Despite better sales, operating earnings fell somewhat short of our forecast. Operating leverage was hampered by capacity constraints (worsened by covid)  and heightened costs in Other markets, and a negative impact from newly acquired Beyers in Germany in Main markets. However, we expect completed expansion programs in Other markets and strong demand to contribute to margin improvement, in line with the company outlook, from Q2 onwards. While we believe the strong sales support our EBITA estimates, higher interest rates lead to a minor reduction (-6 per cent) in our FY 2022 EPS forecast.

Higher sector valuation trumps interest rates

Since we initiated coverage at the beginning of March, valuations in the Nordic contract manufacturing space have generally recovered somewhat. Hence, while we lower our DCF valuation range slightly due to higher interest rates and WACC, our combined DCF and multiple valuation render a higher base case fair value of SEK 47.3 (44.2) Besides relative low valuation multiples, e.g., PE 22E at 12.3x, we expect continued good sales and earnings momentum to drive the shares higher in the coming quarters


Carlsquare AB,, hereinafter referred to as Carlsquare, is engaged in corporate finance and equity research, publishing information on companies and including analyses. The information has been compiled from sources that Carlsquare deems reliable. However, Carlsquare cannot guarantee the accuracy of the information. Nothing written in the analysis should be considered a recommendation or solicitation to invest in any financial instrument, option, or the like. Opinions and conclusions expressed in the analysis are intended solely for the recipient.

The content may not be copied, reproduced, or distributed to any other person without the written consent of Carlsquare. Carlsquare shall not be liable for either direct or indirect damages caused by decisions made on the basis of information contained in this analysis. Investments in financial instruments offer the potential for appreciation and gains. All such investments are also subject to risks. The risks vary between different types of financial instruments and combinations thereof. Past performance should not be taken as an indication of future returns.

The analysis is not directed at U.S. Persons (as that term is defined in Regulation S under the United States Securities Act and interpreted in the United States Investment Companies Act of 1940), nor may it be disseminated to such persons. The analysis is not directed at natural or legal persons where the distribution of the analysis to such persons would involve or entail a risk of violation of Swedish or foreign laws or regulations.

The analysis is a so-called Assignment Analysis for which the analysed company has signed an agreement with Carlsquare for analysis coverage. The analyses are published on an ongoing basis during the contract period and for the usually fixed fee.

Carlsquare may or may not have a financial interest with respect to the subject matter of this analysis. Carlsquare values the assurance of objectivity and independence and has established procedures for managing conflicts of interest for this purpose.

The analysts Niklas Elmhammer and Fredrik Nilsson do not own and may not own shares in the analysed company.


Research Update Hanza, Q1 2022: Strong growth in extraordinary times