Midsona: New financial targets - ABG

Targets 3-5% average annual organic growth
Adj. EBIT margin above 8% by '27e
No more than 2.5x Net debt/EBITDA


Clear organic growth objective

Firstly, the company has adjusted its topline growth target from a total growth target of 15% (incl. M&A) to an organic growth target of 3-5%. The latter range is in line with consensus' expectations of 3% organic growth in '25e and '26e. Secondly, the company has released an adj. EBIT margin target of over 8%. The previous profitability target was an EBITDA margin target of over 12%. Given the company's depreciation and amortisation profile, the target remains virtually unchanged. Thirdly, the leverage ratio target has now been reduced to 2.5x Net debt/EBITDA, compared to the previous 3x-4x range. In our opinion, the updated financial targets and the new brand-focused strategy provide clarity on the company's growth trajectory, which has previously been volatile because of the company's large number of SKUs and sub-categories of products. A strategy that focuses on top-performing brands could thus simplify the sources of growth and eliminate volatility derived from non-performing brands.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/midsona/Equity-research/2024/3/midsona---new-financial-targets/