Seafire: Multiple headwinds and tough comps in Q2 - ABG

Q2 likely hit particularly hard, due to Nordbutiker/DOFAB seasonality
Near-term macro headwinds, but long-term outlook still good
Trading at '24e P/E of 10x vs. peers at 18x, fair value SEK 20-35


Q2: Consumer weakness and temporarily elevated costs

In Q2, Seafire had sales of SEK 286m, up +1% y-o-y, of which -11% organic. The negative organic growth was primarily driven by weak consumer demand in Nordbutiker and DOFAB, as well as very tough comps. In addition, total growth was hurt by the Linguacom bankruptcy. At the same time, management states that the vast majority of the subsidiaries are developing well. Adj. EBITA was SEK 24m (35m), corresponding to a margin of 8.4% (12.5%). Beyond the revenue headwinds, profitability was affected by negative FX effects and temporarily elevated costs in some Industry subsidiaries due to succession and investment-related expenses. Q2 marked the first quarter with the decreased financial expenses following the refinancing, and net financials came in at SEK -5m, down 70% q-o-q (excluding the one-off financial expense of 18m in Q1), resulting in adj. EPS of SEK 0.30 (0.53). The company produced lease adj. FCF of SEK -1m (-33m).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/Seafire/Equity-research/2023/8/seafire---multiple-headwinds-and-tough-comps-in-q2/