HMS Networks Minor model adjustments
We have updated our estimates ahead of HMS Networks’ Q2 results (due on 14 July). We do not consider these changes to be material, and we have not changed our SELL recommendation. We have lowered our 2021–2022e EPS by 2% to reflect slight delivery headwinds due to tight supply chains in Q2. We see HMS Networks as a high-quality company and expect 2021 to be a good year operationally, with YOY organic growth of 29% in orders, 25% in revenues, and 50% in EBIT. However, we still view the valuation as stretched, already discounting the organic growth outlook as well as ambitious M&A, with the stock trading at a 2022e EV/EBIT of 36x. We reiterate our SEK290 target price.HMS Networks AB (HMS) is a Sweden-based company engaged in the provision of communication technology for industrial automation. The Company provides solutions to connect industrial devices to networks and products enabling interconnection between different industrial networks. The Company's products are classified into two brands, namely Anybus and Netbiter. HMS, under the brand name Anybus, manufactures and markets intelligent communication technology for machines and electrically controlled equipment. Under the brand name Netbiter it develops and sells communication equipment that facilitates remote management through the Internet, either via the fixed telephony network or the mobile telephony network. The Company operates through numerous subsidiaries, including HMS Industrial Networks AB, IXXAT GmbH, a supplier of communication technology for industrial automation, machine manufacturing and the automotive industry, as well as eWON SA.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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