Stockwik: High growth and improved margins in Q4 - ABG
Q4 report due Friday, 18 February
Solid M&A headroom going into 2022
Valued slightly below core peers
ANNONS
Q4 expectations: Margin improvements y-o-y
We expect sales of SEK 194m for Q4, Stockwik’s seasonally strongest quarter, up 34% y-o-y (6% organic and 29% M&A). We estimate an EBITA of SEK 15.9m, corresponding to an EBITA margin of 8.2% (4.6%), up 3.6pp y-o-y. The margin improvement is mostly attributable to a recovery in the Industry segment, which was negatively affected by the lack of snow during the comparable period which dampened both volumes and profitability. Additionally, the latest acquisitions completed during FY ’21 have been margin-accretive, supporting the y-o-y margin improvement.
Estimates up slightly on M&A
We increase our ‘22e-‘23e sales and EBITA estimates by 1% and 5-4%, respectively, following the acquisition of Tjugonde Friskvård and the divestments of KRVVS and Vaxholms Värmeservice. The latter two were acquired in ’16 and ’18, respectively, and were some of Stockwik’s first acquisitions. Due to their small size (less than 2% of ‘21e sales), Stockwik considers the companies better off in an environment where they are given the new owner's full focus. Nonetheless, management highlights Stockwik’s buy-and-hold strategy and refers to the divestments as an anomaly. Stockwik now consists of 18 separate companies, 7 of which were acquired during ’21, adding ~SEK 175m, or 40%, to ’20 sales. Looking ahead, we expect Stockwik to further grow through M&A, given its ‘21e cash position of ~SEK 200m and ‘22e ND/EBITDA of 2.5x. We do not include further acquisitions in our estimates, however, leaving room for Stockwik to add to our estimates through additional M&A.
13x ‘22e EV/EBITA, 36% ‘21e-‘23e EBITA CAGR
On our estimates, Stockwik is trading at 13x ‘22e EV/EBITA, 7% below core peers. Looking ahead, we forecast a ‘21e-‘23e sales and EBITA CAGR of 10% and 36%, respectively.
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