August sales were SEK 276m, up 10% y-o-y

Growth above our expectations should support margins

’19e EV/EBIT at 10x, well below peers

August average daily sales up 15% y-o-y
Swedol had sales of SEK 276m in August, representing growth of +10%. The acquisitions Metaplan and Karl S Hanssen contributed a combined +5% to growth. Adjusted for working days, the average daily sales grew by 15% (17% in July 2019). For the first two-thirds of Q3’19, sales and average daily sales growth were 15% and 16%, respectively. We note the continued momentum in average daily sales, with average growth of 14% since January 2019.

Implications for our estimates
For Q3’19, we estimate sales to grow by 13% to SEK 809m. Growth in the first two months is currently 15% and the strong performance could add 1-2% to our estimates. We want to highlight that margins are likely to be under pressure throughout the year due to the rapid store expansion in H1’19, but generally opex scales well in high growth periods. The first two months of Q3’19 could add around SEK 2m to our EBIT estimate. While we do not change our estimates at this time we will monitor the developments in monthly sales data closely.

Still trading at a discount to its peer group
At SEK 36 per share Swedol is up 14% YTD, currently trading at 10x ’19e EV/EBIT (down to 9x in ’20e). Trading levels imply a discount of around 30% to our peer group; by comparison, Swedol is above the average EBIT margin with similar growth for ’19e-’21e.

info@introduce.se (Introduce.se)

ABG Sundal Collier - Introduce.se