Midsona: More efficiency on the horizon - ABG

We raise '25e-'26e adj. EBIT by 1%
Continued gross margin recovery expected
Trading at '24e EV/adj. EBITA of ~10x


The hard work is paying off

The Q1'24 numbers beat our estimates on sales and adj. EBIT by +3% and +17%, respectively. The company is actively discontinuing negative and low-margin SKUs and appears to be more than halfway through the discontinuation process. This implies that organic growth for '24e should be marginally negative, but that comps for '25e will be much easier. Constructively, this will further aid the EBIT margin. Given the limited working capital tie-up, we surmise that the discontinued SKUs have been relatively capital-intensive, and that is positive for the future cash conversion.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/midsona/Equity-research/2024/4/midsona---more-efficiency-on-the-horizon/