Year ‘16/17 comparable to ’18/19

Building a larger structure for growth

EV/EBIT next year is again sub 10x

Margin could dip, but no worry
We make minor adjustments ahead of the Q3 report, where we expect sales of SEK 94.8m with an EBIT of SEK 7.7m. This corresponds to an EBIT margin of 8.1%. SJR has had a stable profitability level for a long period; the last quarter when the EBIT margin was below 9% was in Q3 2013.

Transitional year
As mentioned before, the new setup with a merged SJR and SJW, and the start-up period for new business areas like HR, Supply Chain and IT, will take its toll on growth and margins in the near term especially in Q3. This is because less student workers will be part of the business mix, so the quarter will have a more negative seasonal pattern. We view all of these changes as transitional and expect the business to be back to previous growth and margin levels in 2019.

Valuation has come down
Valuation next year is now below 10x EV/EBIT and NTM EV/EBIT is 10.6x.