Humble Group’s Q4 report was strong across the board, with sales of SEK 862m (+11% vs. ABGSCe of 778m), up from SEK 17m in Q4 2020. We were impressed by the organic growth of 42%, proving that Humble is executing on its M&A agenda and achieving organic growth once the acquired businesses are integrated into the group. Also, adj. EBITA was SEK 154m, for a margin of 17.9% (+7.6pp vs. ABGSCe). We note that ~ 32% of the adjustments made in the quarter were attributable to increased freight costs. Although uncertainties from supply chain disruptions and cost inflation remain, we now feel more confident about Humble’s resilience to these issues given the stable FY’21 gross margin of 32%.
Well-positioned to continue the growth story
Since our preview, Humble has announced that it intends to acquire MedicaNatumin in H1’22e, which we think could strengthen Humble’s position in the sports nutrition & ingredients segment. Moreover, Humble’s subsidiaries are growing stronger than we initially expected (FY’21 org. growth of 28%). Although visibility somewhat limited, given the above, we have raised ‘22e and ‘23e sales by ~7% and ‘22e and ‘23e adj. EBITA by 12% and 11%, respectively. Looking ahead, we estimate a 53% ’21-‘24e adj. EBITA CAGR, driven by continued organic sales growth coupled with good operational leverage. All in all, Humble seems to be well-equipped to continue growing its subsidiaries going into ‘22e; we forecast organic of 13%, just below its financial target of 15%, leaving some possible upside to our estimates.
Share trading at adj. ‘22e-‘23e EV/EBITA of 17x-13x
Following our estimate revisions, we lift our value range to SEK 22-39 (21-37) per share. Our value range translates into an adj. ‘22e EV/EBITA of 18x-28x.
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