Revenues up 35% y-o-y, driven by M&A

Delayed license process behind sales revisions

‘22/’23e EV/EBIT of 7x, 17% FCF yield

Q3: Adj. EBITA margin of 10.3% (8.3%)
Cedergrenska reported solid Q3 numbers, with revenues of SEK 206m (153m) up 35% y-o-y, mainly driven by the acquisitions of SPIRA and Växjö Fria Gymnasium. Adj. EBITA was SEK 21.2m (12.6m) for a margin of 10.3% (8.3%). We are still learning about the seasonality pattern, as the firm has not historically disclosed these figures. The worrying EBITA margin trend that we saw in H1 halted in Q3, but we think it is too early to draw any major conclusions from the y-o-y margin improvements given that the firm mentioned some savings from pandemic-related posts (e.g. lower personnel costs due to difficulties sourcing temporary staff). Cedergrenska ended Q3 with cash and cash equivalents of SEK 33.5m (16.6m) and paid SEK 60.2m for acquisitions in Q3.

Delay for Margarethaskolan and higher goodwill amortisation
Cedergrenska was denied a license to take Margarethaskolan over from the Swedish School Inspectorate, as the application was received outside of the normal application period; it now aims to complete the acquisition in 2024 instead. We adjust our forecast accordingly, leading sales to decline 2.3% and 3.5% for ‘21/’22e and ‘22/’23e, respectively. We also increase our goodwill amortisation, noting that this figure was higher than anticipated in Q3 following the acquisition of Växjö Fria Gymnasium. In total, we lower our EPS forecast for ‘22/’23e by 20%.

New fair value range of SEK 30-49 (31-51)
Political debate regarding the independent school sector has been ongoing over the last couple of months. Some changes are likely to occur; we see a change in the application process for compulsory schools as probably, for example. A new measure to alter the school vouchers was also proposed by the current government, but we have yet to see any figures. In our fair value range, we have conducted different scenari
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