Midsona
Midsona - Q3e: M&A/FX almost offsets lost Alpro sales (ABG Sundal Collier)
2019-10-02 17:46
Q3’19e: -1% sales growth, GM up but EBIT down y-o-y
15-9x EV/EBITDA and 23-13x EV/EBIT ’19e-’21e (adj.)
Lowered ’19e estimates, still plenty of margin levers ahead
Q3’19e: -1% sales growth (-5% org.), EBIT margin of 6.3%For Q3’19e (report due 23 Oct.), we forecast sales of SEK 763m, -1% y-o-y. We expect FX and two recent acquisitions (Eisblümerl and Ekko Gourmet) to support sales growth by 4%. However, we believe this will be more than offset by organic growth of -5% (due to the lost Alpro contract). We assume similar SG&A as in Q2’19 and a stronger gross margin (+120bp y-o-y, +10bp sequentially) to trickle down to a Q3’19e EBIT of SEK 48m, -4% y-o-y (on an adj. basis), for a margin of 6.3% (-20bp y-o-y). We expect to see the first results of the Nordic efficiency programme in Q4’19e.
15.0-9.2x adj. EV/EBITDA ’19e-’21e on revised estimates
We lower our ’19e EBIT by 12%, mainly due to our lower sales forecasts and lowered gross margin assumptions (owing to continued EUR/SEK headwinds). From Q1’20e, we expect new price hikes to support higher gross margins again. Midsona financed its latest acquisition, Alimentation Santé, with a bridge loan that it plans to replace with equity through a share rights issue of up to SEK 600m later this year. We expect the issue to take place in November but have not yet included it into our estimates. On our updated forecasts, Midsona is trading at 15.0-9.2x adj. EV/EBITDA and 23.0-12.5x adj. EV/EBIT for ’19e-’21e.
Price hikes, synergies and cost initiatives to support margins
Although Midsona’s EBIT margin looks set to decline in ’19e, we see potential for margin expansion in the years ahead. Firstly, we expect price hikes to support gross margins from Q1’20e. Secondly, we expect gradual sales and cost synergies from the recent acquisitions. Lastly, we expect to see cost savings from Midsona’s Nordic efficiency programme from Q4’19e and onwards. Overall, this leads us to believe that Midsona will reach its profitability target (>12% E
...
- Läs mer på Introduce
Läsaren av innehållet kan anta att ABG Sundal Collier har erhållit eller kommer att erhålla betalning för utförandet av finansiella företagstjänster från bolaget. Ersättningen är på förhand avtalad och är inte beroende av innehållet.
info@introduce.se (Introduce.se)
ABG Sundal Collier - Introduce.se