Swedencare
Swedencare - Back to normal 20%+ organic growth (ABG Sundal Collier)

2020-10-22 21:48
Sales and EBIT beat expectations
Stronger organic & M&A growth mainly responsible…
Share is trading at EV/EBIT 63x-30x
Q3 report significantly stronger than our expectations
Swedencare’s Q3 report was significantly stronger than our expectations. Sales came in at SEK 70m, c. 20% above our expectations. The higher revenues stem from both organic performance as well as M&A. Organic growth came in at 27% vs. our expectations of 17% and the M&A growth contribution came in at c. 95% (ABGSCe) vs. our forecast of 69%. The most surprising part of the topline development was the Stratford growth, which showed significantly stronger growth than we expected. On both organic and inorganic higher performance, we now are confident in seeing the 20%+ organic growth rates the company has shown historically, and raise our sales estimates by 8%, 7% and 6% for ‘20e, ‘21e and ‘22e, respectively.

Margin diluted on M&A - EBIT revisions of 4-5% ’21-‘22e
Naturally on the back of the Stratford acquisition, margins came down. The gross margin decreased by 11.1pp y-o-y, mainly due to the acquisition as well as a larger share of dental bones sold, which likely does not come with as gross high margins as the Plaqueoff powder. All-in-all, gross margins were lower than our expectations, while adj. opex was roughly in line with our expectations. The scale benefits overall from higher than expected sales counteracted our higher anticipated gross margin. This led to an adj. EBIT margin of 29% vs. our expectations of 27.8%, which all else equal naturally will take a positive leap in Q4 with the Nutravet and AP additions. On the back of the higher volumes, we raise our EBIT by 6% and 5% for ’21e and ‘22e, respectively.

No more M&A ’20, but ’21 pipe looks interesting
The company does not expect any further M&A activity during 2020. However, given the value proposition the company offers towards M&A prospects in comparison to the likely bidding competitors, the M&A pipeline should look interesting – and the c
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  • 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.

research@abgsc.com (Introduce.se)
ABG Sundal Collier - Introduce.se

Swedencare - I dag

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Stockholmsbörsen, OMXS30

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