Nexam Chemical - Early days in a big market

• Q3 sales lower than expected (-5% vs. ABGSCe)
• Major untapped potential in Recycling
• Long-term potential intact; EPS positive in '26e

Q3 sales softer, impacted by seasonal effects

Nexam reported softer than expected sales of SEK 46m, +3% y-o-y and -5% vs ABGSCe. The quarter was affected by seasonal effects and holiday closures. Reactive Recycling (12% of sales in Q3'25) continues to be the clear growth driver, currently offsetting the weaker sales in Lightweight, which is affected by weaker market conditions. The company now has two major recycling customers running full-scale production, contributing to a run-rate of SEK >15m per year. In addition to these two, new customers are scaling up production and multiple trials are ongoing. EBIT adj. was also lower at SEK -2.3m (vs. ABGSCe -0.41m), due to the lower than expected sales.

Estimate changes and outlook

We lower '25e-'27e sales by 1-3% and total '25e-'27e EBIT adj. by SEK 9m on the back of the Q3 report. Our long-term view of the company remains largely unchanged. We forecast that sales will grow at a 13% CAGR in the period '25e-'27e, and that Nexam will leverage its current opex base to reach a 7% EBIT margin in '27e.

Untapped potential in Recycling

We still find the company's niche in Reactive Recycling attractive, believing it to represent a good growth opportunity, driven by cost savings and environmentally friendly solutions. The company approximates its serviceable obtainable market to EUR 70m by 2030 (based on 5% penetration in Europe and 2% elsewhere), compared with a current run rate of roughly EUR 2m, highlighting significant untapped upside. The share has returned -4% L3M (vs. peers at -3%, OMXSALLS at +2%) and is currently trading at 1.6x-1.1x '25e-'27e EV/Sales.