Seafire: Putting the money to good use - ABG
Acquires OPO Scandinavia
Adds 8% and 13% to ‘22e pro forma sales and EBITDA
‘22e ND/EBITDA at 2.6x post acquisition
Seafire enters the Nordic optics industry
Seafire today announced the acquisition of OPO Scandinavia (OPO), a company that designs, markets, and sells spectacle frames, accessories, and tools for the optics industry in the Nordics. According to management, 70% of sales is from own brands that are manufactured in China by third-party. OPO has 17 employees, and its central warehouse is in Malmö, Sweden. The company reported Q1’22 R12m sales and EBITDA of SEK 64m and 16m, respectively, corresponding to a margin of 25%. The company grew sales at a 7% CAGR in ’15-’21. Through stable gross margins at ~66% on average, and operating leverage, the EBITDA grew at a 17% CAGR in ’15-’21. Both sales and EBITDA growth are in line with the historical pro forma (pf) development of Seafire’s group of companies. The acquisition adds 8% to ‘22e pf sales and 13% to ‘22e pf EBITDA. Seafire pays an EV of SEK 92m (including full earn-out), corresponding to 5.75x EV/EBITDA. Following the acquisition, Seafire will reach annual net sales of ~SEK 950m and an adj. EBITDA of ~SEK 140m pf R12m as of Q1'22.
M&A headroom remains, potential to add 15% to EBITA in ‘22
Following the acquisition and bond issue of SEK 200m, Seafire has a cash position of ~SEK 350m and an ND/EBITDA of 2.6x in ‘22e. ND/EBITDA comes down to 1.9x and 1.2x for ‘23e and ‘24e if we assume no additional M&A. In contrast, assuming Seafire expands ND/EBITDA to 3.5x, and avg. acquisition multiplies of 7x EV/EBITA, Seafire could add 15% to our ‘22e EBITA estimates (including the pf contribution from OPO). If so, the pf ‘22e ND/EBITDA would become 3.0x.
10x ‘22e EV/EBITA
All in all, we consider OPO to be a solid contribution to the group with stable margins and an attractive growth profile. Due to multiple arbitrage, the ‘22e EV/EBITA comes down from 10.6x, to 9.9x post acquisition.
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