North Media: Unfolding of strong strategic initiatives - ABG

Solid Q2 and softer landing in H2’21 anticipated
FK Distribution initiatives seem to be materialising
We raise our EPS estimates and FVR by ~2%

North Media announced Q2 revenue of DKK 259m (6% vs. ABGSCe at DKK 245m) and EBIT of DKK 68m (12% vs. ABGSCe at DKK 60m). The return on securities was DKK 61m (vs. ABGSCe at DKK 31m), so Q2 saw strong EBT of DKK 128m (42% vs. ABGSCe at DKK 90m). Already last week (12/08), North Media upgraded its Q2 rev. guidance by 2% to DKK 1,015-1,035m (995-1,025m) and EBIT by 5% to DKK 250-265m (235-255m). The upgrade was driven by FK Distribution, whereas there was a slight positive revision in OFIR and negative revisions in BoligPortal and Bekey. Overall, the volume decline for FK Distribution is anticipated to be lower than initially expected, and management say there have been good developments in core businesses and momentum in strategic initiatives that should boost revenue and earnings by 2022. These include the launch of SaaS products in BoligPortal, building new customer groups in Ofir and Bekey’s contracts in the stairwells segment.

On 16 August, FK distribution signed an agreement with Salling Group to continue the distribution of leaflets for the largest retail chains in Denmark, a contract that will run until YE’24 and does not impact the company’s medium-term 2022-23 financial ambitions. FK Distribution also sees the potential to expand its collaboration with Deutsche Post (in early ‘22e) where it now delivers to ~500k households. Driven by the momentum in FK Distribution, we lift our sales estimate by 2%; due to product mix, we lift our gross margin by 0.4pp for 2021-22e, which raises our EBIT by ~3% and EPS by ~2% due to lower net financial items.

We raise our FVR to DKK 106-159 (103-156), a mid-point increase of 2% driven by the estimate changes in this report. North Media will host a public management call tomorrow, 19 August at CET 15:30-16:30 in English, and we will host a management conference call for investors on Friday, 20 August at CET 11:00-12:00. Sign-up is required for both calls.

Länk till analysen i sin helhet: https://www.introduce.se/foretag/north-media/Equity-research/2021/8/north-media---unfolding-of-strong-strategic-initiatives/