Tomra (Sell, TP: NOK140.00) - Q3 reveals more weakness
We believe the soft Q3 results for the Food segment (EBITA 51% below consensus) revealed a less robust business model than assumed by the market. With the company having addressed cost inflation earlier in the year, we and consensus had forecast a gradual return to higher margins after re-pricing initiatives. We have reduced our 2023–2024e EPS by 5%, due to higher costs and lower revenues for Food, and in turn our target price to NOK140 (150). We regard the 2023e P/E of 36x as too rich and reiterate our SELL.Tomra Systems is a creator of sensor-based solutions for optimal resource productivity within the business streams of reverse vending, material recovery, compaction, recycling, mining, and food. Co.'s operating structure comprises two business areas and six business streams. The TOMRA Collection Solutions businesss area consists of three business streams: reverse vending, material recovery, as well as compaction. The TOMRA Sorting Solutions, business area consists of three business streams: food, recycling, and mining.
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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