Humble Group: Less M&A, more cash flow ahead - ABG

Minor estimate changes
Gross margin improvements still on the horizon
'24e lease adj. FCFE yield excl. earn-out payments of 9%


Takeaways from the report

The Q3 report was in line with both our and FactSet consensus estimates. Y-o-y organic growth was 1pp below our estimate of 13%. The M&A contribution was quite strong given that pro forma organic growth was 16%. The company missed on the gross margin by 80bps and 60bps vs. ABGSC and cons. estimates, respectively. This miss is mostly explained by a relocation of inventory in some subsidiaries as products with low turnover and/or profitability were divested. That said, the adj. operating cash flow of SEK ~120m (operating cash flow less interest expenses and added back NRIs) was very strong, and beat our expectations for the fourth time in a row. In our view, this serves as additional evidence that the group's underlying businesses can reliably generate cash.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/humble-group/Equity-research/2023/11/humble-group---less-ma-more-cash-flow-ahead/