Humble Group: Proforma organic growth of 23% - ABG

Adj. EBITA slightly below expectations Continued strong organic growth of 44% Solid outlook with continuous growth and potential deal

Q2’22 result slightly below ABGSC estimates Q2 sales came in at SEK 981m (-4% vs ABGSC 1,020m), Gross profit SEK 344m (+1% vs ABGSC 342m), Adj. EBITDA SEK 94m (-23% vs ABGSC 107m), adj. EBITA SEK 98m (-16% vs ABGSC 98m), EBITA SEK 70m (-29% vs ABGSC 98m). Operating cash flow before change in NWC came in at SEK 70m, +70m y-o-y. Pro forma sales grew 26% organic to SEK 1,547m with an adj. EBITDA of SEK 117m (+24% y-o-y). As such, 37% and 34% of the 2025 sales and EBITDA target was fulfilled on a LTM basis.

Q2’22 thoughts and outlook Humble’s Q2 report came in a touch below our expectations but with continued strong organic growth of 44% (+19pp. vs ABGSCe 25%), to be compared with the target of 15%. As such, the M&A contribution was slightly softer than we anticipated. As expected, on the back of cost inflation, higher freight costs and mix, margins came down somewhat, with a gross margin of 35.1% (-4.3pp. y-o-y and +1.6pp. vs ABGSCe 33.5%) and the adj. EBITA margin of 8.4% (-3.9pp. y-o-y, -1.3pp. vs ABGSCe 9.6%). Considering the seasonally slower nature of H1, we expect higher sales and improved margins in H2’22e. Lastly, Humble states that the outlook is strong, including continuous growth and potential deal ahead.

We expect consensus to come down slightly The Humble Group shares is down c. 46% YTD and is on our unrevised estimates trading at EV/EBITA of 11.5x (‘23e). We expect consensus estimates to come down slightly on the back of the reported Q2’22 results.

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