Nilörngruppen: Mixed quarter on the cards – ABG


Q1 report due on 21 April
We expect sales of SEK 174m and EBIT of SEK 16m
Share trading at EV/EBIT 12.8x-9.5x in ’22e-’24e

Q1 expectations
Niloerngruppen (Niloern) reports its Q1 results on 21 April. Niloern finished 2021 on a record high note; however, Q1 is usually a seasonally weaker quarter for the company. As such, we expect Q1 to be on the softer side. Although the underlying market seems to have kept up relatively well into 2022, we note that Niloern has a vast exposure towards China in terms of production. We are currently seeing a worsening COVID-19 situation in parts of that country, resulting in new lockdowns, hence disrupting parts of Niloern’s production. Additionally, freight costs and prices for some input materials have continued to surge, and we fear that margins could have been slightly hampered in the quarter. In terms of sales growth, we estimate all customer groups (e-commerce, sports, retail) to have contributed in Q1. We believe that e-commerce has performed especially strongly, and that retail has seen a continued upswing.

Minor estimate revisions
We expect a relatively flattish sales development of -1% y-o-y, to SEK 174m for the quarter. Moreover, we expect a slight contraction in the gross margin (of 1.6pp y-o-y to 44.8%) due to continued surging freight costs and cost inflation on input materials. For EBIT, we forecast a y-o-y deceleration on tough comps, yielding a margin contraction of 6.2pp y-o-y (to 9.2%). We trim our ’22e-’24e sales estimates by 1.5%, mainly because of FX effects but also due to some production disruptions in the China facility. Additionally, we lower our ’22e EBIT estimate by 1%, primarily due to increased personnel costs due to new recruitments.

Share trading at EV/EBIT 12.8x-9.5x in ’22e-’24e
On our updated estimates the Niloern share is trading at ’22e-’24e P/E of 17.9x-13.6x, and EV/EBIT of 12.8x-9.5x. This is in the upper range of its historical EV/EBIT NTM of 9.7x.

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