Cedergrenska: Still burdened by political discussions – ABG


Lower short-term profitability, should recover in H2
Positive revisions from acquisition
We slightly lower our DCF assumptions

Q2: Sales growth of 25% y-o-y, EBITA margin of 5.4% (10.3%)
Cedergrenska reported Q2 ‘21/’22 sales of SEK 186.9m (150.1m), corresponding to y-o-y growth of 25%. This was slightly lower than we expected, although we lack quarterly numbers for last year and therefore focus more on the full-year numbers. Adj. EBITA was SEK 11.5m (14.5m), corresponding to an adj. EBITA margin of 6.2% (9.7%). The y-o-y decline was expected, although somewhat higher than our forecast. This is due to Helleborus having a seasonally stronger H2 than H1, while Cedergrenska is currently operating Tibble Gymnasium Campus Kista on low capacity utilisation, as the school has struggled to fill vacancies after its move to Kista from Stockholm City. For Helleborus, Täby municipality has announced increased funding from January 2022.

Establishes new geographical presence in Växjö
Our estimate revisions mainly stem from acquisitions. First, Cedergrenska has acquired Växjö Fria Gymnasium, thereby establishing a new geographical presence outside of the Stockholm region. We think there is an opportunity for Cedergrenska to broaden its offering in this region to compulsory schools and preschools. Secondly, the acquisition of Margarethaskolan has been slightly delayed. In total, we raise ‘21/’22e sales by 1% and ‘22/’23e by 7%.

New DCF valuation range of SEK 31-51 (35-58)
Despite the positive revisions to estimates, we lower our DCF valuation range due to taking our margin assumptions down somewhat on the back of the ongoing political discussion surrounding a change in school vouchers. The new DCF valuation range is SEK 31-51 (35-58). We think we have taken a cautious approach, as we deem it unlikely that a ban on profits will materialise in the sector. For that to happen, we think: 1) the left-leaning parties need to win next year’s government election, and 2)

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