Topic: Yesterday Astor's minority stake Nordic Shield Group announced a large order intake while on Wednesday, the subsidiary Scandiflash reached an important agreement as a reseller of doppler radar systems. In detail:
To recap, NSG is a civil defense company (36.5% stake, recently increased from 36%) that develops and builds shielded structures like shelters, data centers, and containers. In doing so, it has two subsidiaries: NEZ and Cesium. While NEZ builds and sells highly secure (physical and technical) data centers for mostly civil customers, Cesium builds mobile security vaults (e.g. bullet, chemical and explosion proof mobile command centers) for defense purposes.
Now, NEZ secured a SEK 256m order from an undisclosed company in the Western world. This is one of the largest order in NSG's history, and first revenues are expected to be recognized already in Q4'25 and final delivery is scheduled for Q4'26e, with ongoing revenue recognition until then.
As Astor consolidates NSG at equity, only the attributable net income will appear as "income from companies recorded at equity", pushing EBITDA, but not impacting group sales. Assuming a stable EBITDA margin for NSG (FY'24: 28%) going forward, a net income margin between 5-15% seems reasonable, in our view. Consequently, this order alone would thus translate into a SEK 5-14m positive EBITDA contribution over the next 12 months (eNuW), which compares well to our old estimate of SEK 15m for NSG's attributable net income in FY'26e, based on the current order book. Now, we conservatively raise this estimate to SEK 20m for FY'26e (i.e. + SEK 5m from this order).
Second to NSG, Scandiflash continues to expand as well. The company recently entered a cooperation agreement with Pulse MC2 (a French reseller of Scandiflash's flash X-ray systems and INFINITION doppler radar systems) to resell the doppler radar systems to customers in Sweden, Norway, and Denmark. Although the expected revenue and margin impact is not disclosed, it should add additional sales and profits in absolute levels, however, the cooperation has the potential to drag margins. Simply put, we do not estimate that Scandiflash's superb 30%+ EBITDA margin can be maintained if a relevant share of sales are lower margin reselling revenues.
Against this backdrop coupled with strong anti-drone defense news flow across Europe and currently ample M&A firepower, we strongly reiterate our BUY recommendation and slightly increase our PT to SEK 57.00 (old: SEK 56.00), based on DCF.
ISIN: SE0019175274