Probi - Committed to growth

20% organic growth vs. ABGSCe 12% Investing in growth; expecting to reach financial goals 34x-29x EV/EBIT ‘21e-‘22e for 11% EBIT CAGR ’20-‘23e Q4: Strong growth in Americas outshines softer EMEA/APAC Once again facing easy comps, Probi reported 20% organic growth y-o-y (vs. ABGSCe 12%). The stellar growth stemmed from Americas, with 20% total growth y-o-y (vs.

ABGSCe 11%) as the momentum in the e-commerce sales channels persisted for Probi's US customers. Much like the trends we saw in Q3’20 and in line with our expectations, EMEA and APAC continued to face headwinds from COVID-19 with its greater reliance on physical sales channels. Sales in EMEA declined 18% y-o-y and APAC was down 24% y-o-y.

However, management remains optimistic for the turnaround prospects for the regions during 2021. A new pan-European customer is set to boost sales as of Q1’21e and the APAC region stands to benefit from replenishment orders and a new management team now in place. Committed to growth in 2021 and beyond Lower gross margins (mix effect) and an increased cost-base led to EBITDA of SEK 47m (-12% vs.

ABGSCe) for a margin of 25% (-5.1pp vs. ABGSCe), hence missing the financial goal of =29% EBITDA margins. With an expanded R&D programme, and a limited DPS increase (+10% y-o-y) despite a strong balance sheet (ND/EBITDA -1.7x ’21e), we believe it is clear that Probi is set to continue investing in growth.

Despite significant turbulence in EMEA in APAC, 2020 was a successful year for Probi, with 15% y-o-y sales growth after a period of declining sales over 2017-2019. Probi established 20 new customers, established two strategic collaborations, executed on a US plant upgrade, initiated three clinical studies and set new financial targets. 34x EV/EBIT ‘21e: ~23% above historical 2y average With easy comps in EMEA/APAC and continued tailwinds in Americas, we model 10% organic growth for an EBITDA margin of 29% in ‘21e.

We raise our EBIT ‘21e-’22e by 8-10% following strong gr....