In this equity research report, analysts Johan Darell, Johan Larsson, and Nelly Åkesson take a closer look at the Swedish network infrastructure company, Alcadon Group (ALCA). The Company operates in four different segments, and the analysts estimate fiber infrastructure to outgrow other segments following recent acquisitions, to account for 65% of the total revenue 2023E. A newly appointed management has changed Alcadon’s way of operating to include a more clear acquisitions agenda, one of them being Danish/German fiber manufacturer 6X Intl. which accounted for 37% of Alcadon’s revenue in the first three quarters of 2021E.
A strongly improved EBIT-margin, along with other factors, motivates a valuation in line with peers conducting in a target price of 160.3 SEK and a potential upside of 133.3%.
Investment highlights:
- Further expansion into underdeveloped markets may give Alcadon additional first-mover advantages over peers.
- Currently expanding their current portfolio of wholly-branded goods, providing improved margins.
- Set to play a role in the inevitable 5G rollout, as the Company did for both 3G and 4G.
