Nilörngruppen - World keeps on labeling - ABG

Q2 report due on 15 July We expect sales of SEK 222m and EBIT of SEK 27m Share trading at EV/EBIT 8.5x-7.1x in ‘22e-‘24e Q2’22 preview Nilörngruppen reports its Q2 results on 15 July. In the wake of several strong quarters, we believe momentum will remain in Q2, but we are slightly more cautious about the following quarters given the uncertain consumer environment. In Q2, sales should be aided by the delivery of wristbands and gift boxes for ~600,000 visitors to the three-weekend long Tomorrowland festival. Despite two of these three weekends being sold and accounted for in 2020, the event is likely to positively impact Q2 sales volumes. Furthermore, the company is likely to have reaped the benefits of its global sourcing network, thus largely mitigating the potential negative effects of the Shanghai lockdowns. While we believe that these efforts have helped to some extent, we still expect the lockdowns to have restrained volumes somewhat. Following cost hikes for input materials and freight alongside more personnel costs due to continued hiring in Portugal and higher salaries, we expect an EBIT margin contraction of 1.1pp in Q2. All in all, we forecast sales of SEK 222m (+29% org.) and EBIT of SEK 27min Q2. Minor positive estimate revisions Looking into H2 and onwards, Nilörn faces tough comps and multiple uncertainties, including: 1) large client-specific stock it needs to sell during the fall, 2) surging input costs and 3) a potential downturn in retail sales. Hence, while we lift our ‘22e sales estimates by 5% following a forecasted strong Q2 and positive FX effects, we leave our ’23-24e estimates largely unchanged (+0-2%). We remain cautious on the margin development due to the extraordinary ’21 performance and the potential cost and demand headwinds approaching. Share trading at EV/EBIT 9.0x-7.4x in ‘22e-‘24e On our updated estimates, the Nilörn share is trading at ’22e-’24e P/E of 13.0x-10.8x, and EV/EBIT of 9.0x-7.4x. On an NTM basis, the share is tra ... Läs mer på ABG Sundal Collier