Lagercrantz made four acquisitions in December: DP Seals, Material Handling Modules Europe (MHM), Nordic Road Safety and Suomen Diesel Voima. While DP Seals, MHM and Suomen Diesel Voima are typical Lagercrantz acquisitions in size and profile, we view Nordic Road Safety as slightly different as its larger and founded only seven years ago.

There is a lot of discussion about how the strengthening Swedish krona will affect Swedish industrials. A large part of Lagercrantz sales are in SEK and NOK (c50%), while a significant part of the input costs are linked to the USD. We believe the reversion for SEK and NOK will have a somewhat positive effect on costs but also a somewhat negative effect on sales as a significant part of sales (c50%) are in other currencies. As Lagercrantz has begun to make more acquisitions in foreign currencies, we believe, if anything, the strengthening is slightly positive long-term.

As we model acquisitions in our valuation, the impact of the four acquisitions have a limited positive effect on our estimates and valuation of Lagercrantz. We reiterate our valuation range and our Base Case Fair Value is SEK140 per share. The share price has strenghtened significantly since our last update and we believe Lagercrantz is now fairly valued where continued EPS growth will drive the share price upwards.