Dist IT: Expect solid growth of own brands - ABG

Q2’21 report due on Wednesday, 18 August
EBIT down 7% ‘21e, 27% ’20-‘23e EBIT CAGR
Trading at 8x ‘22e EV/EBIT with ample room for M&A

We estimate Q2’21e sales of SEK 542m, up 7% y-o-y (9% organic, -2% FX), mainly driven by a slight recovery in Aurora Deltaco following the gradual reopening and continued strong performance in Sominis. Volumes in Septon should still be muted given the low public event activity. We expect some pressure from external brands on gross margins through increased logistic and purchasing costs, however, somewhat offset by the increasing share of own brands (30% Q1’21e vs. 27% Q1’20). Therefore, we forecast group adj. EBIT of SEK 5m (SEK 4m) for a margin of 0.9%, up 20bp y-o-y, when adjusting for SEK 7m in state support included in the Q2’20 results.

DistIT is trading at 8x ‘22e EV/EBIT while offering ‘21e-‘23e lease adj. FCF yield of 8-11%. In addition, the recently communicated M&A strategy combined with ‘21e net debt/EBITDA of 0.7x leaves plenty of room for DistIT to enhance growth through acquisitions, which is not included in our estimates. 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%.

Länk till analysen i sin helhet: https://www.introduce.se/foretag/distit/Equity-research/2021/8/distit---expect-solid-growth-of-own-brands/