Tomra (Sell, TP: NOK160.00) - Growing through cost pain
We expect Q2 EBITA of NOK427m (results due at 07:00 CET on 15 July), reflecting continued cost headwinds in Collection and Food, and a robust Recycling & Mining segment with order intake of NOK643m (up ~20% YOY), and healthy EBITA of NOK128m. We have lifted our 2023–2024e EPS by 4–9% on the new 2022–2027e sales CAGR target of 15% communicated at the CMD, and correspondingly our target price to NOK160 (155). However, we continue to regard the stock as overvalued, at a 2023e P/E of 40x, and believe the market’s implied growth expectations are too optimistic. SELL reiterated.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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