Svedbergs - Seeing the start of a softer renovation market - ABG
Q4 report in brief
Svedbergs continued to show relative strength in a tough consumer market, with Q4'22 net sales of SEK 438m, -2% vs. ABGSCe. The +56% y-o-y sales growth benefited from the acquisition of Roper Rhodes (+63%) and FX tailwinds (+3%), but headwinds in the home improvement market led to an organic decline of 9% for the group. Across the Nordic region, demand was softer than in previous quarters, but Svedbergs Group continues to strengthen its UK position, with sales in Roper Rhodes holding up well. Through cost control and rolling out price increases throughout the year, gross and EBITA margins were protected at 41.3% and 12.4% respectively (+50bp and +70bp y-o-y). Including earn-outs related to the Roper Rhodes acquisition, the reported ND/EBITDA was a rather healthy 2.0x in Q4'22, well within the 1.5-2.5x target. The reinstated DPS of SEK 1.5 could be viewed as a clear positive signal when entering tougher times.
Opex reductions benefit '23e-'24e
The outlook remains uncertain, with macroeconomic worries driven by surging energy prices and inflation. Despite optimistic commentary on the momentum out of the quarter, we continue to consider the outlook for the project market, ~15% of group sales, as soft and take a slightly more cautious view on sales across the group after the report showed earlier declines for the Svedbergs brand than previously forecast. In total, we lower '23e-'24e net sales by 2-0%. Cost savings from layoffs to be gained in '23e and a maintained gross margin with lower freight rates in COGS mean that we raise '23e-'24e EBITA by 0-1%, however.
Share trading at 7x-6x ’23e-’24e EV/EBITA
After Wednesday's positive share reaction, Svedbergs is trading at 7x-6x ‘23e-‘24e EV/EBITA on our updated estimates. After only minimal estimate changes, we leave our fair value range unchanged at SEK 31-46.
Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/svedbergs/Equity-research/2023/2/svedbergs---seeing-the-start-of-a-softer-renovation-market/