Stockwik - ’21-’23e EBITDA up 6-7% after M&A

Acquires MittX Aluminiumproffset AB (~3x EV/EBITDA) ’21-‘23e EBITDA up 6-7% from M&A 16x ‘21e EV/EBITDA, 40% ’20-‘23e EBITDA CAGR M&A announcement – acquires MittX Today (17 May), Stockwik announced via press release an agreement to acquire 100% of MittX Aluminiumproffset AB, which will be included in Stockwik’s Industry segment from 1 May ’21. The agreement is expected to be signed in the next few days. MittX was founded in 1995 and has a long history of growth and profitability. The company produces designed and model-adapted aluminium frames for construction and agricultural machinery.

All frames are supplied as standard with position lights, flash lights and work lights and are pre-drilled for easy and neat installation. In Q1’21, MittX generated R12m sales of ~SEK 28m and EBITDA of ~SEK 6m, for an EBITDA margin of ~21% (vs. Stockwik at 11.

1%). The purchase price amounts to SEK 20m on a cash and debt-free basis and will be financed through Stockwik’s existing cash position, which corresponds to an EV/EBITDA multiple of ~3x, while Stockwik is trading at ~16x ‘21e EV/EBITDA. Finally, with MittX added to the group, Q1’21 R12m pro forma sales and EBITDA were ~SEK 608m and 72m, respectively, corresponding to a pro forma EBITDA margin of ~12%.

Value-creative deal, ’21-‘23e EBITDA up 6-7% We argue this deal is in line with Stockwik’s acquisition agenda, focusing on companies with a long history of profitability and steady growth. The acquisition of MittX, with above-group margins, offers margin expansion opportunities and thereby higher profitability. Based on this transaction alone, we raise sales by 3-4% and EBITDA by 6-7% in ’21-‘23e.

Finally, we forecast a ’20-‘23e sales CAGR of ~18% and a solid EBITDA CAGR of ~40% for the same period. Stock trading at 16x ‘21e EV/EBITDA; room for more M&A Stockwik is trading at ~16x ’21e EV/EBITDA with a 40% ’20-‘23e EBITDA CAGR. Given the high EBITDA growth, the EV/EBITDA multiple comes down fast, to ~12x ‘23e.

Althou.