https://www.swedbank-aktiellt.se/analyser/2019/02/05/tomra_systems_asa.csp

Momentum is built for return stations
With the EU moving forward and new countries discussing recycling systems, momentum for Tomra's business is good. Meanwhile, we expect a very strong result for Q4 2018, driven by a strong quarter for Sorting Solutions. We repeat the Buy and Target Price 250 NOK.

The EU has ratified the agreement
The European Council has formally approved the December 2018 agreement with expanded producer responsibility to cover the costs of debris cleaning and the 77% collection target for plastic disposable bottles by 2025 and 90% by 2025 by the end of the summer. In addition, Portugal has announced that they can introduce a system by 2023 and Turkey has also started a process to introduce a return system.

UK: Greater producer responsibility
The UK has put forward a proposal for packaging waste just before Christmas, which places higher demands on the producers for the cost of recycling and has clearly stated that they are planning a return system. The proposal is planned to be sent out for referral in the spring. However, a return system is expected to be in operation in 2023, which entails installations during the second half of 2021 and 2022. We had previously adopted 5,000 installations in England in 2020, which now seems unlikely. We therefore lower the estimates by 10% for 2020p. However, the indication is that Scotland is starting late in 2019 or early 2020.

Solid Q4 is expected on February 21st
We expect Tomra to show revenues of NOK 2,355m for Q4 2018 (NOK 2,041m Q4 2017) and an EBITA result of NOK 413m (NOK 302m Q4 2017). The result is supported by a strong development within Sorting Solutions. We expect a dividend of NOK 2.86 per share, up from NOK 2.35 last year.

Excellent opportunities
We believe it is unlikely that the EU and the UK will achieve their goals without a return system, which creates great opportunities for Tomra. We repeat the Buy and Target Price 250 NOK.