Tomra (Sell, TP: NOK160.00) - Solid Q2 growth and FX tailwind
The Q2 report was mixed, with a strong performance in Food and high revenue growth, offset by continued cost inflation, supply disruptions, and softer margins in the Collection and Recycling segments. The EBITA margin of 14% was 1%-point below consensus expectations and 3%-points lower YoY. We have raised our 2023–2024e EPS by 3% on the depreciating NOK and strong revenue growth in Q2. However, we still find the stock overvalued at a 2023e P/E of 40x and believe the market’s implied growth expectations are too optimistic. We reiterate our SELL and NOK160 target price.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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