Dist IT: EBIT beat and major acquisition - ABG

EBIT 8% better than ABGSCe
Acquired EFUEL adds c. 11% to DistIT’s ‘21e EBIT PF
EFUEL is a EV charging player with 30% market share

Q1 sales came in at SEK 545m, up 8% y-o-y and +1% vs. ABGSCe. Septon had the most significant growth at +40% y-o-y, with more muted growth in the largest business area Aurora Deltaco at -2%. Adj. EBIT came in at SEK 5m, up 16% y-o-y and 8% better than ABGSCe, for a margin of 1%. The beat is mainly derived from stronger than expected performance in Septon, driven by strong demand in the consumer segment. Results of Own brands was on the low end, growing 8% y-o-y (ABGSCe +28%) and constituted 26% of group sales.

We see limited estimate revisions based on Q2 numbers. However, DistIT announced the acquisition of EFUEL, one of Sweden’s largest companies within electrical vehicle charging boxes, as it has a market share of c. 30%. EFUEL is expected to have sales of SEK 120m in ’21 (adds c. 5% to DistIT’s ‘21e sales pro forma) with an EBIT margin of at least 10% (at 10% it adds 11% to DistIT’s FY ‘21e EBIT pro forma). According to DistIT, EFUEL is expected to grow 70-100% per year over the coming years, in line with its expectation of the market growth rate. On ‘21e numbers, DistIT paid 15.4x EV/EBIT for EFUEL. However, with the projected growth, the price paid falls to low single digit EV/EBIT towards ‘23-‘24

DistIT has begun to execute on its M&A agenda which we see as a clear positive. The acquisition of EFUEL will bolster organic growth and margins for the group going forward, enhancing DistIT’s financial profile. We estimate that the acquisition of EFUEL will bring ND/EBITDA ‘22e to c. 1.1x, leaving plenty of room for additional M&A. DistIT expects to be able to acquire companies at ~3.5x EBIT after synergies, and expected M&A firepower of SEK 1.5-2bn implies it could overshoot its ‘25e sales target of 3.5bn by ~100%. DistIT is currently trading at 8x ‘22e EV/EBIT.

Länk till analysen i sin helhet: https://www.introduce.se/foretag/distit/Equity-research/2021/8/distit---ebit-beat-and-major-acquisition/