Investment case builds from higher margins, de-leveraging of balance sheet
As a leading Northern-European gym club and swimming facility operator, we believe Actic offers secular growth exposure to strong health awareness trends. Currently stuck between a rock and a hard place amid the ongoing pandemic, resulting in gym club closures and/or freezes of membership subscriptions, we believe equity market focus has been shifting to its high financial gearing. With Q3 in the books, implying a y/y increase in clean EBIT of SEK 7m to SEK 33m after 9M 2020 (EBIT margin improvement of 200bps to 5.6% of sales) and strong cash flow generation (SEK 147m higher y/y to SEK 65m), IAS17 net debt/EBITDA is down to 3.11x, in line with its targets. Assuming a going concern, we argue this should support further multiples expansion.
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