DistIT - Muted growth in Q1
Q1’21 report due 29 April Forecast 1% y-o-y sales growth, 16% adj. EBIT growth Trading at 10x ‘21e EV/EBIT, 28% ’20-‘23e EBIT CAGR Q1 expectations We estimate Q1’21e sales of SEK 568m, up 1% y-o-y (3% organic, -2% FX). We note that Q1’20 saw no COVID-19 effects, so we face somewhat challenging comps on the significant decline in retail activity this quarter. We expect the positive margin trend from previous quarters to continue, supported by increasing share of own brands (30% Q1’21e vs 23% Q1’20).
Consequently, we forecast group EBIT of SEK 11m (SEK 9m) for a margin of 2%, up 20bp y-o-y. Seasonally, Q1 is a rather unimportant quarter, as it makes up just under 10% of annual EBIT. Estimate changes and outlook We lower our sales estimates -1% for ‘21e due to a larger-than-expected COVID-19 impact on retail channels in Q1.
For the same reason, we lower our ‘21e EBIT estimates -8% to SEK 122m. Overall, we estimate a slow Q1 but a positive rest of the year (primarily H2) driven by the vaccination roll-out and a return to normal. We forecast a ’20-‘23e EBIT CAGR of 28%, driven in part by a geographical expansion, but mainly by continued high profitability and growth rates for own products, as well as relatively stable opex in relation to revenue growth.
Trading at 10x ‘21e EV/EBIT, avg. ’21-‘23e FCF yield of 8% DistIT is trading at 10x EV/EBIT ‘21e, 22% over its 5Y average. Nevertheless, the high expected ‘21e-‘23e EBIT growth means that the valuation quickly declines to 6x EV/EBIT ‘23e with an average ‘21e-‘23e FCF yield of 8% or the potential to accelerate growth through M&A.