Tomra (Sell, TP: NOK150.00) - Short-term Collection headwinds
We expect Q3 EBITA of NOK516m, 3% below consensus. While we believe price increases will prompt a margin recovery within Collection and Recycling, we still believe Q3 will be marked by cost inflation, particularly within Collection, which in our view will not fully recover until 2024 due to long-term non-inflation-protected contracts. We have cut our 2023–2024e EPS by ~4%, driven mainly by lower estimates in Collection, where we see greater risk of postponed implementation in upcoming DRS states; thus, we have cut our target price to NOK150 (160). We 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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