Stockwik - Lean, mean, acqusition machine - ABG

Q2 report due on Friday, 27 August
Estimates intact, solid outlook driven by recent M&A
13x ‘22e EV/EBITDA, poised for additional acquisitions

We forecast sales growth of 61% (11% organic and 50% M&A) in Q2’21e, mainly driven by the past 12 months of high acquisition activity. Q1’21 sales were weighted by Property Services, which is characterized by a certain randomness in the business. An example of this is the randomness in exactly when a water pipe breaks and needs to be repaired. Consequently, certain fluctuations in sales are to be expected from quarter to quarter, which partly explains the sales decrease in the last quarter. However, we expect a normalization in the Property Services segment during Q2’21e, which should contribute to the organic growth. We estimate EBITDA of SEK 19m, up 72% y-o-y for a margin of 12%, up 81bp, driven by acquisitions with above-group margins.

The share is currently trading at 13x ‘22e EV/EBITDA and 17x ‘22e EV/EBITA. The latter is 46% below larger compounders such as Addtech, Indutrade and Lagercrantz, while Stockwik offers a ’20-‘23e EBITDA CAGR of 40%. We estimate a ‘21e cash/sales ratio of c. 38% and a ‘21e net debt/EBITDA of 2.6x, following the directed share issue in April ’21 of SEK 143m before transaction costs. Combined with the recruitment of Johan Fagerlund Sjöberg, who has more than eight years of experience as a lawyer and most recently came from Betsson, where he worked with acquisitions, financing and corporate governance issues, we deem Stockwik poised to continue growing at a fast pace through additional acquisitions, which could add to our estimates. We increase our fair value range slightly to SEK 151-276 (141-264) on higher peer multiplies.

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