North Media will report its Q1 on 16 May, which will be the first quarter with SDR consolidated. We forecast Q1e group revenues of DKK 339m, up 41% y-o-y (but only up 1% if we exclude SDR). Our Q1 EBIT estimate of DKK 33m corresponds to a margin of ~10%, down some 8pp y-o-y, as SDR will be a drag on group margins. Despite recently divesting parts of the investment portfolio to fund the acquisition, we still estimate an unrealised gain of DKK 144m in Q1e (equivalent to a return of 22%) driven particularly by Novo Nordisk and NVIDIA.
Salling deal lifts '25e-'26e EBIT 1-3%; paper prices still high
With the exception of lifting EPS by 22% on the unrealised Q1e investment gain, we make only minor changes to our '24 group estimates. We thus remain slightly above the mid-point of the FY'24 revenue and EBIT guidance. Beyond '24, we leave our estimates unchanged for SDR, BoligPortal, Ofir, and BeKey, but raise '25e-'26e group EBIT by 1-3% on the back of FK Distribution's recent contract extension with the large Danish grocery retailer group Salling Group. North Media says the extension implies unchanged to slightly increased volumes in '25-'27. With Salling Group's ~34% Danish market share, according to Retail Institute Scandinavia, we consider this extension clear proof that physical leaflets remain a vital part of retail advertising. However, we still have limited insights into the contract dynamics (e.g. pricing and volume flexibility). On a slightly negative note, paper prices appear to have stabilised at a relatively high level in recent months, down ~35% from the peak in '22, but still around 25% above the average in '03-'21 (see chart on page 2).
FVR of DKK 60-100 (58-97)
Our '24e-'26e revisions drive the adjustment of our FVR to DKK 60-100 (58-97).
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