Green Landscaping Group: The green M&A engine powers on - ABG

52% adj. EBITA growth driven by non-SE divisions
'23e-'25e adj. EBITA up 1/3/2%, 13% CAGR in '22-'25e
11-8x EBITA in '23e-'25e, 7-10% FCF yields


Stable organically, strong M&A-driven growth

Green Landscaping's (GLG) Q2 sales grew 32% y-o-y (+1% vs. ABGSCe, +3% vs. FactSet cons.), of which 4% organically (ABGSCe 9%, cons 8%, 12% in Q1'23). According to the CEO, there had been no visible signs of weakening end-markets, but competition had picked up. We expect GLG to maintain org. growth fairly in-line with its markets (3-4% over time), and forecast 3-2% org. sales growth in H2'23e. Profitability was strong, as adj. EBITA grew 52% y-o-y (+7% vs. ABGSCe, +8% vs. cons), where we estimate that org. adj. EBITA grew 1% (+4% in Q1'23), and yielded a margin of 9.4% (ABGSCe 8.9%, cons 9.0%, 8.2% Q2'22). However, a one-time impairment related to a Swedish project held back the margin by ~1pp, which will not reoccur. We expect adj. EBITA to grow by 36-9% in H2'23e, and show margins of 9-11%. Finally, gearing excl. earn-outs was stable at 2.8x (2.7x Q1'23, 2.4x pf Q2'23), and we understand that GLG is actively searching for new M&A targets.

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