Svedbergs: Expands into The Netherlands - ABG

- Net sales SEK 432m, 1% vs ABGSCe
- EBITA SEK 59m, 52% vs ABGSCe
- Announced acquisition of Thebalux

Q3 in brief: Q3 was strong overall overall. Net sales of SEK 432m corresponds to y-o-y growth of -1% (-8% org.), and is 1% vs ABGSCe SEK 426m. By segment, Roper Rhodes continues to be stronger than the group average with 13% y-o-y growth (2% org.), Svedbergs is losing some momentum at 29% y-o-y growth, and the two smaller Macro Design and Cassoe are soft at -11% and -1% y-o-y growth respectively, although the latter two brands decline significantly less than in Q2. Price increases in the Roper Rhodes brand and positive effects from lower shipping rates lifts the gross margin 3 pp y-o-y to 44.8%. However, deleverage on opex means EBITA is flat vs last year at SEK 59m, 13% vs ABGSCe. This corresponds to a 13.7% margin. FCF of SEK 29m is lower y-o-y (SEK 31m in Q3'22). Roper Rhodes keeps outpacing the UK market, and recent price increases is a strong signal for the brand strength we believe. The Nordic market is materially softer than abroad, and commentary in the report does not change this view. We keep expecting the Nordic brands to underperform Roper Rhodes (and should it be approved by the AGM, also Thebalux) going forward.

Thebalux acquisition announced: Svedbergs Group has announced the intention to acquire the Dutch bathroom furniture designer, producer and supplier Thebalux. Thebalux is said to have LTM (as of Q2'23) sales of SEK 376m and an EBITA of SEK 95m, making the acquisition clearly accretive on Group margins. The acquisition is made at a 5.5x EV/EBITA multiple, in line with Svedbergs Group current multiple, and is expected to add 20% to topline and 37% to EBITA on our current '24e Group estimates. The acquisition is initially financed through extended credit facilities, and the Group plans to carry out a SEK 400m rights issue in Q1'24 to amortise said credit facilities, an initiative that is supported by major shareholders. We expect a slightly positive impact on EPS from this acquisition. While not explicitly stated, the acquisition could further bring some synergy effects in purchasing.

Share trading at 5.5x-3.1x EV/EBITA '23e-'25e: The share has been strong YTD with a performance of 24%. On Q3 numbers alone, ABGSC estimates for '23e are 3% higher on EBITA. On yesterday's closing price and unrevised estimates, the share is trading at 5.5x-3.1x '23e-'25e EV/EBITA vs a historical one-standard-deviation trading span of 7x-11x. The current share price implies an M&A adjusted FCF yield of 32% for '24e-'25e combined. Svedbergs hosts a conference call today at 11:00 CET. Questions are to be sent in advance to [email protected].

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/svedbergs/Equity-research/2023/10/svedbergs---expands-into-the-netherlands/