“Impressed by how companies have managed the situation”
Nasdaq Stockholm rose 3.7 percent in August and the Small Cap index was up 5.2 percent. Carnegie Småbolagsfond increased by 6.8 percent.
As usual, we saw the last mid-year reports in August and outcomes for the fund’s holdings look good. We are impressed by how the companies have managed the extraordinary situation we have experienced in the past six months.
Among the companies that were the last to report we find Scandi Standard, the leading chicken producer in the Nordics. The company delivered operating results that beat expectations and led to higher profit forecasts. Scandi Standard has announced that it plans to start selling plant-based products and that acquisitions are at the top of the agenda. That sounds exciting, especially considering that the valuation is particularly low, even though the profit trend looks like it will be good going forward. The share rose by 15 percent in August.
Systemair has delivered notably good performance since we brought the share into the portfolio six months ago. From a long-term perspective, we believe that there will be increasing focus on ventilation driven by the place of environmental protection and energy efficiency high on the agenda along with the Covid-19 pandemic that is making the importance of a good indoor climate clearer than ever. Systemair has historically grown powerfully through acquisitions, which have been on the back burner while focus was on improving profitability. Might acquisitions be put back on the agenda once the profitability boost has been executed? The environmental angle is interesting, as ESG favourites are enjoying a considerable valuation premium on the stock exchange. The valuation of Systemair is still attractive. The share rose by 32 percent in August.
Dometic has delivered strong performance since hitting bottom in early April and it is easy to say the price upturn in terms of percentage feels astonishing. Naturally, it is worth noting that share price performance was anaemic before then and that the share is now being traded at about the same level as at the beginning of the year. In our estimation, the RV market, which is Dometic’s most important market, has structurally improved. We believe there has been a lasting improvement in the market and that this is not a short-term Covid effect. That considered, one might think a higher value for Dometic is justified. The July statistics from Germany and the US were exceptionally strong and we believe there will be a jump in profit forecasts for Dometic going forward and that in the light of that, the share valuation is low in absolute numbers and compared to its own history. The share rose by 25 percent in August.