Increased urbanization and environmental protection act in Nobinas favor. The expenditures for environmental protection in Sweden, which is Nobina’s primary market, has increased by 4,9 % CAGR between 2007-2017. The average degree of urbanization in the Nordic countries increased from 83,1 % to 85,5 % between 2007-2017, consequently increasing the demand for Nobina’s services as the company has a focus to provide environmentally friendly bus solutions in densely populated areas.

Nobina has a competitive advantage in the Nordics. Nobina has higher revenue and better EBIT margins than peers, which is driven by the size of the company and efficient contract management. Due to the recent acquisition of Samtrans and De Blaa Omnibusser, and the selling of unprofitable Swebus, Nobina has a strong market position where they have good possibilities of capitalization and to strengthen their role as market leaders.

Nobina is in a good spot to expand the contract portfolio. Nobina has a history of efficient contract management and Nobina is, in a base case, expected to expand the contract portfolio by 28,7 % until year 23/24 and henceforth take a larger market share in the Nordics. This will be possible due to Nobina’s commitment to efficient contract management with an ambition to only acquiring profitable contracts.

Compared to peers, Nobina has the most efficient operation with an EBIT-margin of 5,2 %. Nobina’s economies of scale, track record of successfully acquiring new contracts and a modern bus fleet is what drives Nobina’s margins to be better than peers. Compared to peers, Nobina has an average of 1,5x the revenue and 2x the EBIT-margin.

In a base case, Nobina is valued to an implied price/ share of 75,2 SEK. The biggest impact on Nobina’s result, and its valuation, is the number of contracts in the portfolio. Total number of contracts are estimated to increase with a CAGR of 4 % from year 17/18 to 23/24. Nobina has a history of EBIT-margins around 5 %. It is estimated to, over time, get close to 6 %. The result is an estimated revenue CAGR of 5,4 % for the same period. Using a DCF with a WACC of 6,5 % and a perpetuity growth rate of 1,5 % the stock is implied to be traded at a discount of 17 %.

Analysts: Lukas Olin & Christopher Sendelbach Gille