Midsona - Strong bounce-back from Q3
Q4 report better than expected Q3 de-stockings were a one-off Estimates up 1% for ’21e-‘22e Q4 details Sales came in at SEK 1,083m (ABGSCe 995m), EBITDA at SEK 114m (ABGSCe 103m) and adj. EBIT at SEK 74m (ABGSCe 64m). The strong growth is primarily explained by the acquisition of System Frugt, with a SEK 203m sales contribution, driven by both strong underlying demand and seasonality. Organic sales growth was 10.
4% (ABGSCe 4%). M&A contribution was 24. 7%, and FX was -3.
8%. As a result of a different cost structure within System Frugt, gross margins fell to 27. 6% (ABGSCe 28.
9%). Strong operational leverage, however, led to adj. EBITDA and EBIT margins of 10.
5% and 6. 8% (ABGSCe 10. 3% and 6.
4%). Strong report across the board Midsona’s Q4 report was stronger than expected, driven by strong underlying demand, which we assume was partly due to new lockdowns. The report was also a sign that the Q3 slow-down was a one-off.
The company experienced stellar traction from its store rollout around Europe. Furthere, as Alimentation Santé growth is now counted as organic growth, we suspect this has further spurred organic growth. On the back of the beat, but offset somewhat by recent FX movements, we raise our 2021-2022e sales estimates by 2%.
Looking at EBIT, we make positive adjustments of c. 1% for ‘21e-‘22e. On our updated estimates, the Midsona share is trading at a ’21-22e EV/EBITA of19x-16x, in line with larger food brand peers.
Leaving record 2020 behind & looking forward in plant-based Midsona leaves a record year behind in 2020. The comps on hoardings and the stay-at-home trend are likely to be tough in 2021. However, momentum has picked up in Q4, which seems set to continue in to 2021.
Furthermore, during the fourth quarter, Midsona announced significant investment plans (~SEK 45m) within plant-based food. We think this is smart. Given the underlying market growth, it is important to be early to the show.
In addition, we assume the ROI is likely to be much h.
