North Media: Finally some signs of improving demand - ABG

Q2 revenues 2% below ABGSCe, EBIT 9% below
Signs of improving paper demand positive, but not surprising
'23e-'25e EBIT cut by 1-2%, FVR of DKK 59-98

Q2 revenues 2% below ABGSCe; EBIT disappointed
North Media posted Q2 group revenues of DKK 238.4m (-2% vs. ABGSCe at DKK 243.4m), equivalent to negative ~8% y-o-y growth. Group EBIT came in at DKK 37.1m (-9% vs. ABGSCe at DKK 40.8m), corresponding to a margin of 15.6%, with the miss caused by the lower top line. Q2 saw a DKK 61.1m gain on the investment portfolio (slightly lower vs. ABGSCe at DKK 64.5m). EPS fell 5% short of our estimate (adj. EPS -6% vs. ABGSCe).

Signs of improving paper demand; BoligPortal strong
North Media narrowed its FY'23 guidance to revenues of DKK 935m-970m (mid-point raised ~1%) vs. ABGSCe of DKK 948m and EBIT to DKK 135m-160m (mid-point up 4%) vs. ABGSCe at DKK 150m. The narrowing is primarily driven by higher expectations for the Last Mile segment, as the company sees customers planning to increase their distribution of leaflets. While a positive, this development is not surprising given the declining paper prices and strong marketing impact from leaflets, and both our previous and current estimates reflect a gradual normalisation of leaflet demand in H2'23e and '24e (Q2 was too early for the effect to show on the numbers, as we had anticipated). A further positive in Q2 was the continued strong performance in BoligPortal, helped by listings at all-time-high levels (FY'23 BoligPortal revenue and EBIT guidance were lifted by 1 and 16%, respectively), and we remain in the higher ends of guidance for '23e. On a negative note, Ofir (which also saw a guidance downgrade due to tougher market conditions) delivered weak Q2 results.

Slight negative estimate revisions; FVR of DKK 59-98
We lower '23e-'25e revenues by 0-1% on the Q2 miss, driving 1-2% lower EBIT. Our DCF yields DKK 98/share, while our conservative scenario assuming a complete ban on physical leaflets in '25e yields DKK 59/share.

Läs mer på ABG Sundal Collier.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/north-media/Equity-research/2023/8/north-media---finally-some-signs-of-improving-demand-/