Midsona - Expect a year of continued improvement
16 april, 21:47
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What to expect in Q1'25eWe anticipate 2% y-o-y organic growth in Q1'25, implying sales of SEK 942m and EBIT of SEK 45m, for a margin of 4.8%. The organic growth is partly due to light comps (-4% in Q1'24). However, looking at consumer confidence and food spending, we anticipate that the softer-than-expected consumer climate in Q1 will have a negative effect on sales. However, we believe that more SKU reductions are value-accretive despite a more challenging consumer climate than previously expected. Operating cash flow should be negative, around SEK -70m, as Midsona should tie up some capital in Q1. Estimate changesWe cut '25-'27e sales and EBITA by 2% and 3%, respectively, mainly due to the recent strengthening of the SEK. We expect an organic growth rate in the lower end of the company's targeted range of 3-5%. Some pressure on organic growth is likely to remain due to the ongoing SKU rationalisation efforts. We do not change our estimated EBITA margins, as FX-related gross margin improvements are likely to be offset by opex increases. We believe that selective M&A is more likely than buybacks because the industry is fragmented and ripe for consolidation. With respect to timing, a realistic option for a return to M&A is likely when the leverage ratio reaches the range of 1-1.5x (net debt/EBTDA), which will likely be achieved in late '25e or early '26e. Implied valuationBased on our revised estimates, the company is trading a bit below 8x NTM EV/EBITA, which is 25% below current peer multiples. We note that peers, in turn, are trading ~25% below the 10-year historical median of ~14x NTM EV/EBITA. |
Läsaren av innehållet kan anta att ABG Sundal Collier har erhållit eller kommer att erhålla betalning för utförandet av finansiella företagstjänster från bolaget. Ersättningen är på förhand avtalad och är inte beroende av innehållet.
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Midsona - Expect a year of continued improvement
16 april, 21:47
|
What to expect in Q1'25eWe anticipate 2% y-o-y organic growth in Q1'25, implying sales of SEK 942m and EBIT of SEK 45m, for a margin of 4.8%. The organic growth is partly due to light comps (-4% in Q1'24). However, looking at consumer confidence and food spending, we anticipate that the softer-than-expected consumer climate in Q1 will have a negative effect on sales. However, we believe that more SKU reductions are value-accretive despite a more challenging consumer climate than previously expected. Operating cash flow should be negative, around SEK -70m, as Midsona should tie up some capital in Q1. Estimate changesWe cut '25-'27e sales and EBITA by 2% and 3%, respectively, mainly due to the recent strengthening of the SEK. We expect an organic growth rate in the lower end of the company's targeted range of 3-5%. Some pressure on organic growth is likely to remain due to the ongoing SKU rationalisation efforts. We do not change our estimated EBITA margins, as FX-related gross margin improvements are likely to be offset by opex increases. We believe that selective M&A is more likely than buybacks because the industry is fragmented and ripe for consolidation. With respect to timing, a realistic option for a return to M&A is likely when the leverage ratio reaches the range of 1-1.5x (net debt/EBTDA), which will likely be achieved in late '25e or early '26e. Implied valuationBased on our revised estimates, the company is trading a bit below 8x NTM EV/EBITA, which is 25% below current peer multiples. We note that peers, in turn, are trading ~25% below the 10-year historical median of ~14x NTM EV/EBITA. |
Läsaren av innehållet kan anta att ABG Sundal Collier har erhållit eller kommer att erhålla betalning för utförandet av finansiella företagstjänster från bolaget. Ersättningen är på förhand avtalad och är inte beroende av innehållet.
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