North Media: SDR behind another round of estimate cuts - ABG

Soft Q1 combined with a downgrade of the FY'24 guidance
Synergies unlikely to show in '24e: cutting EBIT by 16-4%
FVR down to DKK 57-96, net cash position of DKK ~41/share


A soft Q1 coupled with a guidance downgrade

The first quarter with SDR consolidated was a soft one, reflected by EBIT of just DKK 10m. This equated to a margin of merely 3% (down 15pp y-o-y). However, we highlight that DKK ~14m of the DKK 23m deviation vs. our estimate was driven by a one-off write-down of SDR's IT system. Without it, the EBIT margin would have been a more satisfactory 7%, i.e. in the low end of the downgraded FY'24 EBIT guidance (which North Media says is a result of more visibility on SDR's business). The remaining deviation was driven by slower-than-expected revenue growth, at 36% y-o-y (but declining 3% if we exclude SDR). While growth seems set to continue its recovery in FK Distribution after a weak '23, it appears to be slowing in BoligPortal (after a very strong '23). Both Ofir and BeKey are also continuing their weak trends.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/north-media/Equity-research/2024/5/north-media---sdr-behind-another-round-of-estimate-cuts/