Embellence Group: Premium wallpaper keeps growing - ABG

Q4 report due 21 February
We forecast sales of SEK 190m, adj. EBITA of SEK 24m
Share trading at '23-'24e EV/EBITA of 6-5x


Hospitality and premium holds up relative consumer segment

In the DIY-focused Nordic region, we expect Embellence to face a tough Q4e characterised by surging inflation, electricity costs and interest rates. With brands in the Nordics mainly geared towards a mid-price consumer segment, we expect to see lower demand and pencil in an organic decline of 8% in Q4e. On a positive note, we anticipate that Europe and RoW will hold up better. Driven by a favourable premium niche and exposure to hospitality which sees pent-up demand after the pandemic, we forecast organic growth of 1% and 2% respectively for Europe and RoW in Q4e. All in all, we forecast net sales of SEK 190m in Q4e, corresponding to 9% y-o-y growth (-4% org.), supported by the Artscape acquisition. We believe Embellence will be able to protect gross margins with rolled-out price increases and input costs have started to level out. We forecast an adj. EBITA of SEK 24m in Q4e, corresponding to a margin of 12.5% (-2pp y-o-y).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/embellence-group/Equity-research/2023/1/embellence-group---premium-wallpaper-keeps-growing/