Humble Group: From rocky road to smooth sailing - ABG

CPI-PPI gap is shrinking - positive for '23e margins
Q4'22e sales up 3%, EBITDA down 8%
New bolt-ons a sign of confidence for cash flow


Q4'22 estimates

The company highlighted in a press release that it achieved sales records in both October and November, and we therefore raise Q4'22e sales by 3%, but we also cut the estimated working capital release since this data point is indicative of a higher working capital tie-up in Q4. We cut Q4'22e EBITDA by 8% due to gross margin pressure (50bps) that is likely to materialise following the elevated CPI and PPI readings for food as well as a reassessment of the opex structure (up 6% vs. previous estimates). Therefore, we estimate Q4'22 operating cash flow (post changes in NWC) of SEK 118m, representing a 13% increase y-o-y.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/humble-group/Equity-research/2023/2/humble-group---from-rocky-road-to-smooth-sailing/