Q4 report due on 25 February

We expect sales of SEK 778m and adj. EBITA of 80m

Adj. EV/EBITA of 20.7x-15.9x in ‘22e-‘23e

Continued growth story with M&A as the core driver
Since we initiated on Humble, three acquisitions have been made (see M&A schedule further below). As highlighted in our initiation report, we expect M&A to continue to be the core driver of Humble’s growth. However, the group has shown strong underlying organic growth in the most recent quarters (Q3’21: 24%, Q2’21: 17%). While we estimate that organic growth will hold up well, we take a more conservative approach due to the group’s limited track record and expect org. growth of 13% in Q4. Furthermore, although we have seen Humble’s Nordic peer Midsona experience supply chain issues, hampering margins, we expect Humble to have performed well into Q4. More specifically, Humble’s decentralised structure allows the subsidiaries to be agile, thus adjusting swiftly to any disruptions (e.g. supply chain issues). Further, more frequent price adjustments are to be expected to offset cost inflation.

Largest acquisition made so far to become visible in Q4
For Q4 we pencil in seven acquisitions that will become visible, including the largest one the group has made so far, UK-based Solent (20% of FY’21e group sales). We estimate that the M&A additions will amount to ~SEK 760m in Q4. We add eliminations of 8-12% in our forecasts (based on historical levels), impacting sales negatively but neutral to earnings. We estimate Q4 group sales of SEK 778m (+94% q-o-q) and a margin of 10.2% (+0.5pp q-o-q), resulting in adj. EBITA of SEK 80m. For ‘22e-‘23e we lift our adj. EBITA est. by 9-8%, respectively, due to the acquisitions.

Value range lowered to SEK 21-37 (27-44) per share
The Humble Group share is -13% YTD and is on our updated estimates trading at 20.7x-15.9x adj. EV/EBITA in ‘22e-‘23e. Furthermore, we lower our value range to SEK 21-37 (27-44) on higher net debt due to earn-outs and recent acquisitions. The value r
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