We believe Svedbergs will continue to struggle in the Nordics with an inflation and interest rate-pressured consumer. Home transactions and build starts put a damper on our '24e outlook as well. We believe Roper Rhodes could continue to outperform the soft UK market, however, extending the run of stronger performance during 2023. FX movements offset our more cautious organic growth estimates as well, for 1% lower '23e-'24e net sales. In Q3'23, we expect more of the same dynamics as in Q2; we forecast a 26% organic decline for Svedbergs but see Roper Rhodes as materially better for group Q3'23e net sales of SEK 426m (-2% y-o-y, -9% org.).
Margin outlook largely intact
We believe Svedbergs is well-positioned to outperform the soft Nordic home improvement market through its strong and geographically diverse brand portfolio. As well, we believe brand strength is a significant factor in its success with implementing repeated price increases over the last year. Further price revisions in the Roper Rhodes brand (more price hikes in Q3 were communicated in the Q2 report) mean that we expect continued strong gross margins for the group. Opex deleverage from lower near-term net sales estimates means that we make small (-1%) adjustments to '23e EBITA, but further price hikes lead us to raise '24e-'25e EBITA by 1%. In Q3'23, we expect a similar EBITA decline as in Q2 (-12% vs -11% y-o-y) for EBITA of SEK 52m (12% margin, -130bp y-o-y).
Share trading at 6x NTM EV/EBITA
The Svedbergs share is trading at 6.4x Factset consensus NTM EV/EBITA, slightly below the historical range of 6.8-11.0x. We outline our two-scenario DCF analysis in this note, from which we derive our (unchanged after limited estimate revisons) fair value range of SEK 31-46. Our fair value range corresponds to 6x-9x '23e and 6x-8x '24e EV/EBITA... Läs mer på ABG Sundal Collier
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