Probi: FY'24e marks a transition to a promising future - ABG

- Beat on Q2 sales (+3%) and EBITDA (+24%) vs ABGSCe
- EBITDA up 2% for '24e and 1% for '25e
- Our comprehensive analysis indicates a promising long-term outlook

Americas and EMEA progressed well in Q2
Probi reported a strong Q2'24 driven by growth in both Americas and EMEA, reporting sales of SEK 178.9m (+3% vs. ABGSCe SEK 173.0m). The gross margin drooped to 34.2% (vs. ABGSCe of 34.8%) due to increased costs related to operational improvements. Looking at Americas, sales growth was driven by favourable timing effects along with new business, resulting in net sales of SEK 124.3m (+19% y-o-y, -2% vs. ABGSCe). EMEA displayed strength, with sales of SEK 40.3m (+80% y-o-y, +48% vs. ABGSCe) driven by recent B2C initiatives starting to bear fruit. APAC compares negatively, with sales of SEK 14.2m (-14% y-o-y, -25% vs ABGSCe) due to crossborder e-com sales in China facing difficulties and negative timing effects.

Estimate changes and guidance
Management reiterated that the short-term target is to achieve an EBITDA margin in line with FY'23, as FY'24e remains a transitional year. In the coming years, Probi is targeting a five-year sales CAGR of 6% or more and an EBITDA margin >25% for '28e. Given the Q2'24 report and current guidance, we lift our sales for '24e-'26e by 1% and EBITDA by 2% and 1% for '24e and '25e, respectively. EBIT comes down due to mechanical effects due to a lower gross margin and increased D&A.

Positive long-term outlook for Probi
In this note, we examine what probiotics are, the underlying forces driving the market, and our estimates beyond the transitional FY'24e. We believe the company is moving in the right direction and expect to see gradual improvements in profitability over the coming years. The share is trading at an NTM EV/EBITDA of 20.3x on consensus estimates (FactSet), 32% below its historical average of 12.3x.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/probi/Equity-research/2024/7/probi---fy24e-marks-a-transition-to-a-promising-future/