From new Q4 guidance and our more cautious stance on growth in ARPM and memberships, we have lowered organic sales for 2021E and 2022E. According to CEO Anders Carlbark, the good cost management so far in 2020 also reflects “sustainable” measures: we argue higher margins should offset our sales cuts.
We reiterate our mid-point DCF-based equity value of SEK 28 per share
Based on revised earnings, a steady-state EBIT margin of 4.2% and a WACC of 3.9% (from high IFRS 16 leasing debt) we reiterate our mid-point DCF value of SEK 28 per share. At these levels the company would be valued at a prospective PER of about 12x our 2021 EPS forecasts, compared with the current 6x.
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