In this equity report, analyst Oscar Johannesson evaluates NOTE, a northern European local manufacturer and logistic partner operating on a global scale manufacturing electronic products also known as EMS. The analysts narrate why NOTE is well positioned to grow exponentially through acquisitions. Expanding order books, positive industry trends, high GDP growth estimates in main markets, strong financial position, and increasing profit margin are just some of the analyst’s findings that all are contributing to a positive outlook for NOTE Manufacturing. Please click on the picture below in order to access the full report.

Case Summary

  • Profit margin expected to rise to 6.43 % in 2017, an increase of 2.31 % from 2016.
    NOTE has continued to deliver strong financial reports throughout the years. Annual sales are expected to growth with 6.7 % in 2017. Profit margin is expected to rise to 6.43 % in 2017 compared to 4.12 % in 2016. The combination of higher sales combined with lower overhead cost are the key drivers contributing to the increased profit margin. Top-line growth is expected to continue over the upcoming years, mainly due to multiple long-term partnerships.
  • Strong financial position enables acquisitions. NOTE’s current financial position with low net debt combined with an average profit margin at 6.38 % for the first three quarters in 2017 allows the company to expand its operations through acquisitions. The CEO revealed that the company currently is screening the market for potential acquisition targets. Considering NOTE’s strong financial position combined with the fact that the company’s order books currently are expanding faster than the company can ramp up their rate of production an acquisition in the near future should be considered as very likely.
  • NOTE is expected to take additional market shares with estimated CARG at 6.0 % until 2021. The outlook for the industry is very positive. The contract manufacturing industry is estimated to grow from $425 billion in 2016 to $551 billion in 2021 at a 5.3 % CAGR. NOTE estimated CARG at 6.0 % in the base scenario during the same time period indicates that the company will continue to take additional market shares.

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