In this equity research report, analyst Axel Andersson takes a closer look at Vow, a Norwegian company providing waste and water solutions. The analyst estimates a rapid 30.9% topline growth CAGR to 2024E, resulting from worldwide environmental initiatives including RepowerEU, the EU green deal, and the Inflation reduction act. Vow is estimated to gain significant operating leverage in the upcoming years increasing EBITDA margins from 12.9% to 16.8% in 2024E. With the background above the company is currently trading at an attractive level compared to peers. A SOTP valuation concludes a target price of NOK 24.0 based on a 2024E EV/EBITDA multiple of 14.4x implying a upside of 25.5%.
Investment highlights:
- New regulations increasing demand for Vow solutions provides the company with 30.9% revenue growth to 2024E
- Operating leverage on fixed costs expected to increase Vow’s EBITDA margin from 12.9% to 16.8% by 2024E
- Good revenue visibility with a order backlog valued at NOK 2,189m > Vow’s market cap