LHV Institutional 'Harju Elekter (HAE1T ET) Annual Review, June 8th, 2020'
* Harju Elekter AS, established in 1968 and headquartered in Estonia, is a leading manufacturer of electrical equipment, with operations spanning across the Baltic Sea region. Its production facilities are located in Estonia, Finland, Sweden, and Lithuania. HAE had strong revenue growth in the past few years driven primarily by robust revenue growth in Finland, the result of the acquisition of Finnkumu Oy in 2014 and trend towards bigger investments in Finland’s electricity transmission and distribution sector leveraged by Satmatic Oy and Finnkumu Oy. As investments in the Nordic region’s electricity transmission and distribution sector are expected to increase further, and HAE has increased its production capacity, we believe the Group will be able to generate strong growth in its revenues over the next several years except some short-term disruptions due to the COVID-19 pandemic.* We changed our fair value range from EUR 4.70 – 5.00 to EUR 3.90-4.30. To derive our fair value range, we assigned a 90% weight to the DCF valuation and 10% to the relative valuation (P/E multiple). Based on our five-year projections as well as WACC and terminal growth rate assumptions of 8.74% and 2.75%, respectively, the intrinsic value per share of HAE, using DCF is EUR 4.14, 4.5% lower than the share price as of 3rd June 2020.
* This report contains a full set of financial forecasts and is useful for gaining an initial insight into the company. Please also refer to the tables and charts in the attachment.
Harju Electrics Ltd. Harju Electrics Ltd (formerly Harju Elekter AS), is an Estonia-based electrical equipment manufacturer. The Company specializes in the production of electrical distribution systems, control panels, cables and substations; wholesale and mediation of light fittings and electrical appliances; real estate holding and information technology (IT) services, among others. Harju Elekter AS is a parent company of Harju Elekter Group, which consists of five subsidiaries: Harju Elekter Elektrotehnika AS, Harju Elekter Teletehnika AS, Satmatic OY, Rifas UAB and Harju Elekter AB. It is active domestically and abroad in such countries as Latvia, Poland, Norway and the United States and others.
LHV Bank is an independent pan-Baltic bank, based on Estonian capital. The company was founded in 1999 by two founders of Hansapank (today’s Swedbank in the Baltics) and has been offering a full range of investment services for 15 years. In May 2009, LHV received a credit institution licence allowing it to provide all banking services.
The head office is situated in Tallinn, Estonia. Cross-border services are offered in Vilnius, Lithuania and in Riga, Latvia. LHV provides brokerage (institutional and retail), asset management, banking and capital markets services. Compared to other banks, we are more innovative and have more solid experience in investment and entrepreneurship.
The Bank, together with the Group asset management company employs over 320 people. LHV Group shares are listed on Nasdaq Tallinn.
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