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Nilörngruppen: Labels up, perfomance continuing - ABG

Continuing to outperform significantly Strong order intake, up by 43% 2022e EBIT up 28%, 2023-2024e up 6% No signs of a top-line slowdown
Nilörngruppen reported a strong Q2. Sales grew 39% organically, to SEK 269m (+54% y-o-y, +21% vs. ABGSCe 222m). The company sees growth in all regions, with Germany as well as newer southern European markets starting to ramp up. Furthermore, the company mentioned an encouraging US trend. This is despite a Shanghai warehouse that was closed for most of the quarter, making the delivery even more impressive. The company has circumvented this issue through using its other facilities. Although this hurt the margin slightly, profitability was well above our expectations.

Posting margins well above financial targets Despite the challenging logistics, the company reported an EBIT margin of 17%, for EBIT of SEK 45m. This was well above our expectations of a 12% EBIT margin, which was driven by both a 1pp gross margin beat and operational leverage. The company continues to impress with its margin expansion, posting an adj. EBIT margin of 16% on a rolling 12-month basis, to be compared to the financial target of >10%. While the company does not look to be in a rush to raise its target given its historical average, the current margin profile suggests that margins are going to be stronger for longer. Because of the beat, we raise ’22e EBIT by 28% and ’23-24e EBIT by 6%, continuing the significant positive revision trend we have seen since the pandemic started.

Cautiously optimistic outlook comments On the outlook, the company said that the future is difficult to predict given the macroeconomic uncertainties but reported that the order intake looks encouraging at SEK 245m (+43% y-o-y). We agree, and raise our top-line estimates by 8% ‘22-‘24e. On our updated estimates, the share is trading at a ’22-‘24e EV/EBIT of 8x. Läs mer på ABG Sundal Collier
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