Seafire: Continues on its high-growth path - ABG

Q2 report due Tuesday, 23 August
We expect 167% adj. EBITA growth in Q2e ’22e-’24e net profit down 23-4% on higher interest expenses Price increases in support of organic growth We expect Seafire to deliver another quarter of high growth, with sales of SEK 236m, up 125% y-o-y (16% organic and 109% M&A). In conjunction with its Q1 report (27 April), management said that Q2 had started strongly, something we expect has held true for the remainder of the quarter, with solid volume growth. Additionally, we expect continued price increases to add to the organic growth. We estimate an adj. EBITA of SEK 32m, up 167% y-o-y, for a margin of 13.4% (11.3%), with the y-o-y expansion mainly driven by margin-accretive acquisitions. We anticipate component shortages and cost inflation to remain challenging, but note that the situation has gradually improved. Although Seafire has been actively fighting off cost inflation with price increases we expect to see a continued lag in Q2, due to some prices being adjusted according to indices, resulting in a time lag.

M&A contribution offset by increased interest expenses We raise ’22e-’24e sales by 5-8% due to the acquisition of OPO Scandinavia (see our comment “Putting the money to good use” from 30 May). Adj. EBITA for ’22e is up 8% on the acquisition, but partly offset by our lower margin assumptions for the remaining three quarters, resulting in a 1% actual increase. ’23e-’24e EBITA is up 11-13% on M&A. Despite the increase in adj. EBITA estimates, our ’22e-’24e net profit estimates are down 23-4% on higher interest expenses, mainly due to the tap issue of SEK 200m (see our comment “Expands M&A headroom by SEK 220m” from 20 May), and partly due to Stibor 3m being up ~90 bps since Q1.

Ample M&A headroom without additional debt The share trades at 8x ’23e EV/EBITA, 11% below its closest peer Stockwik and 9% below our broader peer group consisting of smaller M&A-driven companies. We estimate a ’23 ND/EBITDA of 2.0x. Assuming M&A multiplies of 6 ... Läs mer på ABG Sundal Collier

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