North Media: The Last Mile cash cow is set to continue - ABG

Q2 EBIT of DKK 52m in line with ABGSCe No shift to JaTak expected – cash cow set to continue New 1Y forward FVR of 56-137 (90-140) Q2 EBIT in line with ABGSCe, revenues slightly higher North Media reported Q2 revenues of DKK 260m (2.4% vs. ABGSCe at DKK 254m) and EBIT of DKK 52m (0.0% vs. ABGSCe at DKK 52m). EBT came in at DKK -62m (-202% vs. ABGSCe at DKK 61m), heavily impacted by a DKK 116m loss (vs. ABGSCe gain of DKK 10m) on the securities portfolio in Q2. The report offered no indications of increased dividends or share buybacks.

With no shift to JaTak expected, the cash cow continues We generally like North Media’s mix of value and growth businesses. We see clear disadvantages of a shift to JaTak or a complete ban on printed matter in Denmark, allowing the Last Mile segment to continue being a cash cow. The segment will thus continue to constitute an important source of funding for the Digital Services segment in the years ahead and for potential M&A. We are generally positive on the performances in BoligPortal and Ofir, while we also see improvement in the underperforming segment Bekey. At group level, we expect generally flat revenues in ’21-‘24e and the EBIT margin to average 20% in ‘22e-‘24e. We remain unconvinced by the company’s capital allocation strategy and estimate the net cash position to reach DKK ~862m in ’24e.

New 1-year forward FVR of DKK 56-137 per share (90-140) Following a change of analyst, we have altered our valuation approach and now estimate a 1-year forward FVR of DKK 56-137 per share (90-140). We derive the high end of our FVR using a DCF valuation based on our ‘22e-‘25e estimates. The lower end of our FVR assumes an extreme case of a complete ban on printed matter in Denmark after ‘23, resulting in zero subsequent cash flows. We also aim to shed some light on the potential combined value of the Digital Services segments BoligPortal and Ofir using multiples from online classifieds peers, resulting in a fair value for the two segments of DKK ... Läs mer på ABG Sundal Collier

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