Classification of NuWays AG to Scandinavian Astor Group AB

Unjustified summertime weakness, BUY the dip.

Astor’s share price has continuously declined over the recent summer, which is fundamentally unjustified in our view, given almost no relevant news flow and no signs of a weakening current trading. Here’s our take:

Astor’s shares have declined by 40% since the latest peak in June. Fundamentally, this seems highly unjustified in our view. On the contrary, Astor has produced positive news flow with sound order intakes (Marstrom: SEK 21m, Oscilion: SEK 15m, Airsafe: SEK 68m, NSG: SEK 35m), closings of Carbonia and NSG/Cesium and improved access to capital (SEK 320m capital increase and SEK 128m credit facility). Consequently, Astor looks at a well equipped M&A war chest and we thus expect further positive news flow going forward.

Therefore, the current weakness comes as a surprise for us. While the reasons behind this remain speculative, one can only guess a lower investor interest and consequent subdued trading activity during the seasonal holiday season responsible for the decline. Historically, this thesis aligns with weak returns of the Swedish stock market in the summer.

The share price decline led to an unjustified multiple compression, with Astor now trading at a very attractive valuation, especially compared to the peer group. Large defence OEMs trade at 20-29x FY’25e EBITDA (13-22x FY’26e EBITDA), which is in line with Astor’s multiples, however, only based on reported figures. If the recent, highly profitable M&A is included on a pro-forma basis, Astor currently trades at 13.7x FY’25e EBITDA (10.5x FY’26e), which implies 40-50% discount to relevant peers. Only two months ago, Astor was trading on par with its peers, based on pro-forma figures.

Ukraine talks only impacts news flow, not fundamentals. The planned, upcoming peace talks between Trump and Putin, are currently causing volatility in defence stocks, also at Astor. In our view, this is based on the assumption that potential peace should lead to lower defence spending. However, with long-term spending cycles, already approved defence programs and the recent upgrade of defence spending targets, this does not seem likely, in our view. Therefore, we regard the share price reaction newsflow driven and not fundamentally justified.

In sum, Astor’s shares now offer an attractive and potentially unique entry opportunity for new investors as well as good way to downward dilute the entry price for existing investors. Therefore, we reiterate our BUY recommendation with unchanged PT of SEK 56.00, based on DCF.