DistIT - Transforming to an ‘own products’ company
Sales in line, EBIT above pre-announced numbers EBIT up 1% ’21e-’22e, Q1’21e still under pressure 6.9x ’21e EV/EBIT on 22% EBIT CAGR ’20-’23e Own brands growing 46% y-o-y Sales was in line with our expectations, but margins were once again better than expected. Sales came in at SEK 740m and grew 4.7% y-o-y. Most notably, own brands (EMV) delivered remarkable growth of 46.2% y-o-y, constituting 29.9% (21.4%) of sales, which we expect to be accretive for margins. As a result, the reported EBIT of SEK 51m was 7% better than ABGSCe and above the preliminary reported numbers of 45-50m.
Interestingly, DistIT disclosed specific numbers for its Smart Home and Gaming concepts within EMV. Smart had revenues of SEK 30m in FY’20, and Gaming has revenues of SEK 97m with growth of 50% y-o-y. FCF was not as impressive as we expected at SEK 22m, with the build-up of working capital having a negative effect of c.
SEK 31m. We would usually frown upon increased working capital. However, given the current supply chain turmoil affecting the electronics market, we see DistIT’s warehoused goods as positive for sales and margins into Q1.
Not out of the woods yet, some pressure in Q1 As all are aware, the increasing spread of COVID-19 has led to further restrictions, hampering retail activity. Naturally, this should take its toll on Q1’21 sales, but we expect organic growth of c. 5% despite COVID-19, primarily supported by the strong EMV momentum and slight price increases.
We expect higher import costs (100%-300% in some cases) from Asia to be transferred to customers, slightly lifting sales without harming margins materially. Overall, we expect Q1’21e EBIT of SEK 20m for a margin of 3.4%. After that, the clouds should clear.
We expect continued solid momentum for EMW in ‘21e, which we see growing c. 20% through the addition of new concept lines and adding more products to concepts such as electrical vehicle charging. All in all, we forecast FY’21 growth of c.
10%, with EBIT margi....