Midsona - introduce.se...Midsona 24 October 2019 ABG Sundal Collier 4 Estimates Aside from the...

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Midsona

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Q3’19: 5% organic growth adj. for Alpro

Q3’19: -1% sales growth (of which -5% organic)…

…and adj. EBIT of SEK 49m (+2% vs. ABGSCe)

Price hikes, M&A synergies and cost savings yet to show

Solid underlying organic growth driven by prioritised brands

We find Midsona’s Q3’19 results as decent, with sales in line with our

forecast and adj. EBIT 2% above our expectation. Although organic

growth of -5% looks soft, it was bang in line with our estimate, and

adjusted for the lost Alpro contract, the underlying organic growth was

solid, at 5% (driven by 12% growth for Midsona’s eight prioritised

brands). The integration of recent acquisitions just started, which we view

as promising for the coming quarters. We do not read that much into the

sliding adj. EBIT (-6% y-o-y, ex IFRS 16), as we expect cost initiatives,

M&A synergies and price hikes to support earnings in coming quarters.

Q3’19 details

Net sales were -1% y-o-y (of which -5% org., 1% FX and 3% M&A), at SEK

765m (0% vs. ABGSCe 763m). Adj. EBIT was -2% y-o-y, to SEK 49m

(+2% vs. ABGSCe 48m), for a margin of 6.4% (vs. ABGSCe 6.3%). Q3’19

included positive EOs of SEK 8m: SEK +11m in a reversed restructuring

charge (COGS), and SEK -3m in acquisition costs (other operating

expenses). The small adj. EBIT beat vs. our numbers comes from a tighter

adj. SG&A ratio (23.7% vs. ABGSCe 24.3%), while the adj. gross margin

was somewhat below our expectation (30.1% vs. ABGSCe 30.6%).

Although the gross margin was lower than we expected, it still increased by

70bp y-o-y, driven by supply chain initiatives and a better mix, somewhat

offset by FX. To mitigate the FX pressure, Midsona has notified retailers of

price increases, which we expect to have an impact from Q1’20.

15-9x EV/EBITDA and 23-12x EV/EBIT ‘19e-‘21e

Aside from the Q3 deviation, we only fine-tune our forecasts. During

Q4’19, Midsona intends to raise up to SEK 600m in new equity to finance

its latest acquisition of Alimentation Santé. We estimate the planned

issue could dilute EPS by ~22%. On updated forecasts, Midsona is

trading at 15-9x EV/EBITDA and 23-12x EV/EBIT for ‘19e-‘12e.

23/10/2019

Performance

Equity Research - 24 October 2019 07:44 CET

SEKm 2017 2018 2019e 2020e 2021e

Sales 2,146 2,852 3,118 3,602 3,733

EBITDA 169 230 293 420 463

EBITDA margin (%) 7.9 8.1 9.4 11.7 12.4

EBIT adj 155 189 194 299 339

EBIT adj margin (%) 7.2 6.6 6.2 8.3 9.1

Pretax profit 112 163 131 252 292

EPS rep 1.89 2.77 2.29 4.22 4.90

EPS adj 2.36 3.01 2.53 4.22 4.90

Sales growth (%) 23.1 32.9 9.3 15.5 3.6

EPS growth (%) 78.7 47.0 -17.2 84.1 16.0

Source: ABG Sundal Collier, Company data

Lead analyst: Ludvig Kapanen

Fredrik Ivarsson

Estimate changes (%)

2019e 2020e 2021e

Sales 0.6% 0.0% 0.0%

EBIT (rep) 2.9% -0.4% 0.0%

EPS (rep) 3.4% 0.0% 0.5%

Source: ABG Sundal Collier

Share price (SEK) 52.2

Food, Beverage & Tobacco, Sweden

MSONB.ST/MSONB SS

MCap (SEKm) 2,424

MCap (EURm) 225.7

Net debt (EURm) 195

No. of shares (m) 46.4

Free float (%) 76.0

Av. daily volume (k) 20.8

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9Midsona OMX STH PI

1m 3m 12m

Absolute (%) 1.4 -3.0 -22.7

OMX STH PI (%) 2.1 4.4 14.0

Source: FactSet

2019e 2020e 2021e

P/E (x) 22.8 12.4 10.7

P/E adj (x) 20.6 12.4 10.7

P/BVPS (x) 1.40 1.30 1.20

EV/EBITDA (x) 15.3 10.4 9.1

EV/EBIT adj (x) 23.1 14.6 12.4

EV/sales (x) 1.44 1.21 1.13

ROE adj (%) 7.0 10.9 11.7

Dividend yield (%) 2.6 2.9 3.4

FCF yield (%) -26.2 9.8 11.3

Lease adj. FCF yld (%) -27.9 7.9 9.4

Net IB debt/EBITDA 7.0 4.6 3.8

Lease adj. ND/EBITDA 7.1 4.6 3.8

Midsona

24 October 2019 ABG Sundal Collier 2

Geographical breakdown, sales, SEKm


Business area breakdown, sales, SEKm


EPS estimate changes, 2019e, SEK

Source: ABG Sundal Collier, FactSet

EPS estimate changes, 2020e, SEK

Source: ABG Sundal Collier, FactSet

Quarterly sales and adj. EBIT, SEKm


OpportunitiesFavourable market trends and conditions for healthy food

and ecological products. Materialization of synergies from

the most recent acquisitions, both cost savings as well as

increased cross-selling. M&A opportunities in Europe and

potential for continued bolt-on acquisitions in Scandinavia.

RisksSome risks include increased competition from retailers’

own brands, acquisition integration issues and inflated

acquisition multiples. Naturally, Midsona is affected by

consumer trends and the general economic environment.

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FMCG retail Healthfoodretailers

Pharmacies Other

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ABGSC FactSet Consensus Mean

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Company descriptionMidsona develops, manufactures and markets products

within health and wellness. The group has around 385

employees. Its operations are conducted through four

geographical business segments: Sweden, Denmark,

Norway and Finland. The company has played an active

role in recent years' market consolidation in Scandinavia

and is now eyeing further market possibilities/consolidation

in the rest of Europe.

Midsona


Deviation table Q3’19

Source: ABG Sundal Collier, company data

SEKm Actual ABGSC Dev Q3'18 Q3'17

Net sales 765 763 0% 773 573

COGS -524 -529 -546 -377

Gross profit 241 233 3% 227 196

OPEX -156 -159 -158 -166

EBITDA 85 74 15% 69 30

EO items 8 0 1 -22

Adj. EBITDA 77 74 4% 68 52

D&A -28 -26 -18 -9

EBIT 57 48 19% 51 21

Adj. EBIT 49 48 2% 50 43

Net f inancials -13 -7 -10 -5

PTP 44 41 41 16

Tax -9 -9 -9 -5

Net income 35 32 32 11

EPS 0.77 0.69 12% 0.70 0.24

Growth

Net sales -1% -1% 0pp 35% 10%

- organic -5% -5% 1pp 2% -4%

- acquired 3% 3% 0pp 27% 13%

- FX 1% 1% 0pp 6% 1%

Adj. EBITDA 13% 9% 4pp 31% 24%

Adj. EBIT -2% -4% 2pp 16% 23%

Net income 9% -1% 10pp 191% 157%

EPS 11% -1% 12pp 191% -3%

Margins

Gross margin 31.5% 30.6% 90bp 29.4% 34.2%

Adj. EBITDA margin 10.1% 9.7% 40bp 8.8% 9.1%

EBITDA margin 11.1% 9.7% 140bp 8.9% 5.2%

Adj. EBIT margin 6.4% 6.3% 10bp 6.5% 7.5%

EBIT margin 7.5% 6.3% 120bp 6.6% 3.7%

Tax rate 20.5% 22.0% -150bp 22.0% 31.3%

Q3'19

Midsona


Estimates

Aside from the Q3’19 deviation, we only fine-tune our forecasts. We raise Q4’19e

sales somewhat on higher expected acquired growth, while we lower our Q4’19e

gross margin to 30.3% (30.9%) due to FX. Other cost ratios remain largely intact.

P&L by quarter


SEKm Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4e

Net sales 350 351 522 521 521 481 573 571 610 714 773 755 786 705 765 862

COGS -219 -223 -348 -337 -354 -328 -377 -376 -402 -496 -546 -536 -570 -490 -524 -601

Gross profit 131 128 174 184 167 153 196 195 208 218 227 219 216 215 241 261

Selling expenses -83 -79 -107 -108 -94 -88 -109 -102 -110 -119 -125 -119 -131 -123 -122 -136

Administrative expenses -31 -32 -44 -42 -36 -39 -62 -42 -48 -56 -56 -52 -61 -59 -56 -60

Other operating income 1 1 0 3 1 1 0 1 1 2 3 1 1 7 -1 0

Other operating expenses -1 -1 -7 -5 -1 -1 -4 -2 -4 -11 2 -3 -3 -1 -5 0

EBIT 17 17 16 32 37 26 21 50 47 34 51 46 22 39 57 65

Net f inancials -4 -5 -8 -7 -6 -7 -5 -4 1 -4 -10 -2 -17 -14 -13 -8

EBT 13 12 8 25 31 19 16 46 48 30 41 44 5 25 44 57

Tax -2 -1 -1 -9 -7 -4 -5 -12 -9 -5 -9 -11 -1 -2 -9 -13

Net profit 11 11 7 16 24 15 11 34 39 25 32 33 4 23 35 45

D&A -6 -5 -7 -7 -8 -8 -9 -10 -10 -11 -18 -13 -26 -26 -28 -30

EBITDA 23 22 23 39 45 34 30 60 57 45 69 59 48 65 85 95

Non-recurring items 0 -1 -19 -7 0 0 -22 1 0 -12 1 0 -25 6 8 0

Adj. EBIT 17 18 35 39 37 26 43 49 47 46 50 46 47 33 49 65

Adj. EBITDA 23 23 42 46 45 34 52 59 57 57 68 59 73 59 77 95

Growth (y-o-y)

Net sales 51% 57% 42% 48% 49% 37% 10% 10% 17% 48% 35% 32% 29% -1% -1% 14%

COGS 65% 84% 54% 54% 62% 47% 8% 12% 14% 51% 45% 43% 42% -1% -4% 12%

Gross profit 32% 25% 23% 38% 27% 20% 13% 6% 25% 42% 16% 12% 4% -1% 6% 19%

SG&A 16% 25% 22% 38% 14% 14% 11% -5% 24% 45% 1% 19% 20% -4% 5% 13%

EBIT 1600% 31% 45% 39% 118% 53% 31% 56% 27% 31% 143% -8% -53% 15% 12% 42%

Adj. EBIT 55% 38% 40% 70% 118% 44% 23% 26% 27% 77% 16% -6% 0% -28% -2% 42%

EBITDA 360% 38% 35% 34% 96% 55% 30% 54% 27% 32% 130% -2% -16% 44% 23% 62%

Adj. EBITDA 53% 44% 35% 59% 96% 48% 24% 28% 27% 68% 31% 0% 28% 4% 13% 62%

Net profit n/a -8% -82% 0% 118% 36% 57% 113% 63% 67% 191% -3% -90% -8% 9% 35%

Margins

Gross margin 37.4% 36.5% 33.3% 35.3% 32.1% 31.8% 34.2% 34.2% 34.1% 30.5% 29.4% 29.0% 27.5% 30.5% 31.5% 30.3%

SG&A margin -32.6% -31.6% -30.3% -29.2% -25.0% -26.4% -30.5% -25.4% -26.4% -25.8% -22.8% -22.9% -24.7% -25.0% -24.1% -22.7%

EBIT margin 4.9% 4.8% 3.1% 6.1% 7.1% 5.4% 3.7% 8.8% 7.7% 4.8% 6.6% 6.1% 2.8% 5.5% 7.5% 7.6%

Adj. EBIT margin 4.9% 5.1% 6.7% 7.5% 7.1% 5.4% 7.5% 8.6% 7.7% 6.4% 6.5% 6.1% 6.0% 4.7% 6.4% 7.6%

D&A/sales -1.7% -1.4% -1.3% -1.3% -1.5% -1.7% -1.6% -1.8% -1.6% -1.5% -2.3% -1.7% -3.3% -3.7% -3.7% -3.5%

EBITDA margin 6.6% 6.3% 4.4% 7.5% 8.6% 7.1% 5.2% 10.5% 9.3% 6.3% 8.9% 7.8% 6.1% 9.2% 11.1% 11.1%

Adj. EBITDA margin 6.6% 6.6% 8.0% 8.8% 8.6% 7.1% 9.1% 10.3% 9.3% 8.0% 8.8% 7.8% 9.3% 8.4% 10.1% 11.1%

Net margin 3.1% 3.1% 1.3% 3.1% 4.6% 3.1% 1.9% 6.0% 6.4% 3.5% 4.1% 4.4% 0.5% 3.3% 4.6% 5.2%

Tax rate -15.4% -8.3% -12.5% -36.0% -22.6% -21.1% -31.3% -26.1% -18.8% -16.7% -22.0% -25.0% -20.0% -8.0% -20.5% -22.0%

2016 2017 2018 2019

Midsona


P&L by year


SEKm 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Net sales 1,458 1,354 1,134 1,174 869 916 920 1,174 1,744 2,146 2,852 3,118 3,602 3,733

COGS -885 -833 -806 -788 -474 -495 -499 -699 -1,127 -1,435 -1,980 -2,185 -2,453 -2,523

Gross profit 573 521 328 386 395 421 421 475 617 711 872 933 1,149 1,210

Selling expenses -328 -290 -258 -248 -272 -278 -271 -323 -377 -393 -473 -512 -587 -604

Administrative expenses -207 -198 -156 -99 -78 -79 -87 -103 -149 -179 -212 -236 -263 -267

Other operating income 13 64 39 18 10 4 6 9 5 3 7 7 0 0

Other operating expenses -9 -1 -3 -6 -8 -4 -2 -10 -14 -8 -16 -9 0 0

EBIT 42 96 -50 51 47 64 67 48 82 134 178 183 299 339

Net f inancials -41 -20 -14 -18 -16 -11 -8 -9 -24 -22 -15 -52 -47 -47

EBT 1 76 -64 33 31 53 59 39 58 112 163 131 252 292

Tax 16 -22 -3 -1 19 -2 4 27 -13 -28 -34 -25 -55 -64

Net profit 17 54 -67 32 50 51 63 66 45 84 129 107 196 228

D&A -26 -23 -15 -15 -12 -14 -14 -19 -25 -35 -52 -110 -122 -124

EBITDA 68 119 -35 66 59 78 81 67 107 169 230 293 420 463

Non-recurring items 0 0 0 0 -6 0 0 -24 -27 -21 -11 -11 0 0

Adj. EBIT 42 96 -50 51 53 64 67 72 109 155 189 194 299 339

Adj. EBITDA 68 119 -35 66 65 78 81 91 134 190 241 304 420 463

Growth (y-o-y)

Net sales -7% -16% 4% -26% 5% 0% 28% 49% 23% 33% 9% 16% 4%

COGS -6% -3% -2% -40% 4% 1% 40% 61% 27% 38% 10% 12% 3%

Gross profit -9% -37% 18% 2% 7% 0% 13% 30% 15% 23% 7% 23% 5%

SG&A -20% -11% -11% 4% 3% -1% 21% 25% 8% 20% 8% 13% 2%

EBIT 129% -152% n/a -8% 36% 5% -28% 71% 63% 33% 3% 63% 13%

Adj. EBIT 129% -152% n/a 4% 21% 5% 7% 51% 42% 22% 3% 54% 13%

EBITDA 75% -129% n/a -11% 32% 4% -17% 60% 58% 36% 28% 43% 10%

Adj. EBITDA 75% -129% n/a -2% 20% 4% 12% 47% 42% 27% 26% 38% 10%

Net profit 218% -224% n/a 56% 2% 24% 5% -32% 87% 54% -17% 84% 16%

Margins

Gross margin 39.3% 38.5% 28.9% 32.9% 45.5% 46.0% 45.8% 40.5% 35.4% 33.1% 30.6% 29.9% 31.9% 32.4%

SG&A margin -36.4% -31.4% -33.3% -28.5% -40.0% -39.0% -38.5% -36.4% -30.7% -26.9% -24.3% -24.0% -23.6% -23.3%

EBIT margin 2.9% 7.1% -4.4% 4.3% 5.4% 7.0% 7.3% 4.1% 4.7% 6.2% 6.2% 5.9% 8.3% 9.1%

Adj. EBIT margin 2.9% 7.1% -4.4% 4.3% 6.1% 7.0% 7.3% 6.1% 6.3% 7.2% 6.6% 6.2% 8.3% 9.1%

D&A/sales -1.8% -1.7% -1.3% -1.3% -1.4% -1.5% -1.5% -1.6% -1.4% -1.6% -1.8% -3.5% -3.4% -3.3%

EBITDA margin 4.7% 8.8% -3.1% 5.6% 6.8% 8.5% 8.8% 5.7% 6.1% 7.9% 8.1% 9.4% 11.7% 12.4%

Adj. EBITDA margin 4.7% 8.8% -3.1% 5.6% 7.5% 8.5% 8.8% 7.8% 7.7% 8.9% 8.5% 9.8% 11.7% 12.4%

Net margin 1.2% 4.0% -5.9% 2.7% 5.8% 5.6% 6.8% 5.6% 2.6% 3.9% 4.5% 3.4% 5.4% 6.1%

Tax rate 1600.0% -28.9% 4.7% -3.0% 61.3% -3.8% 6.8% 69.2% -22.4% -25.0% -20.9% -18.7% -22.0% -22.0%

Midsona


Relative valuation

Midsona’s share is currently trading at a ’20e EV/EBITDA and EV/EBIT of 10x and

14x, respectively. The valuation multiples imply that Midsona is trading 12%

below on EV/EBITDA and EV/EBIT vs. smaller peers, as well as 30% below on

EV/EBITDA and 21% below on EV/EBIT vs. larger peers. We expect Midsona to

post stronger sales and earnings growth (CAGR ’18-’21e) vs. both its smaller and

larger peers. With SEK 600m in new equity (up to SEK 600m planned), we

calculate that Midsona’s net debt/EBITDA will be reduced to 3.2-2.5x for ’20e-’21e,

which is in line with its target of 3.0-4.0x. We estimate the planned issue could

dilute EPS by ~22% (~13m new shares at 10% discount), which in that case would

imply a ’20e P/E of ~16x, or 30%/20% below smaller/larger peers.

Peer group valuation multiples/yields

Source: ABG Sundal Collier, company data, *FactSet consensus

Peer group financial performance/profile

Source: ABG Sundal Collier, company data, *FactSet consensus

MCAP

Company (SEKm) 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e

(1) Smaller peers*

Cloetta 8,087 1.6x 1.5x 1.5x 10.0x 9.2x 8.7x 14.1x 12.8x 11.9x 17.2x 14.8x 14.0x 5.3% 7.4% 7.9% 4.1% 4.7% 5.1%

Raisio 5,256 1.6x 1.6x 1.5x 10.1x 10.1x 8.7x 13.6x 13.3x 12.1x 20.1x 20.1x 18.3x 2.6% -0.4% 4.7% 4.7% 5.0% 5.5%

Hain Celestial 22,335 1.3x 1.4x 1.3x 15.5x 15.2x 13.7x 23.6x 22.8x 19.3x 33.7x 32.9x 26.8x -1.1% 3.2% 3.5% 0.0% 0.0% 0.0%

Average 11,892 1.5x 1.5x 1.5x 11.9x 11.5x 10.4x 17.1x 16.3x 14.4x 23.6x 22.6x 19.7x 2.3% 3.4% 5.4% 2.9% 3.2% 3.5%

Median 8,087 1.6x 1.5x 1.5x 10.1x 10.1x 8.7x 14.1x 13.3x 12.1x 20.1x 20.1x 18.3x 2.6% 3.2% 4.7% 4.1% 4.7% 5.1%

(2) Larger peers*

Nestlé 2,888,588 3.5x 3.4x 3.3x 16.1x 15.5x 14.7x 19.8x 19.3x 18.1x 23.2x 21.6x 20.0x 4.1% 4.3% 4.6% 2.6% 2.7% 2.9%

Orkla 89,235 2.1x 2.0x 2.0x 13.6x 13.2x 12.6x 18.1x 17.6x 16.7x 21.8x 20.9x 19.8x 0.8% 3.9% 4.2% 3.1% 3.2% 3.3%

Kellogg Company 204,042 2.1x 2.2x 2.2x 12.7x 12.5x 12.2x 16.4x 16.1x 15.7x 16.2x 15.4x 14.9x 3.5% 5.4% 5.4% 3.7% 3.8% 4.0%

Kerry Group 200,563 2.8x 2.6x 2.5x 19.2x 17.2x 15.5x 24.0x 21.4x 19.1x 27.2x 24.7x 22.4x 2.4% 3.5% 3.9% 0.7% 0.8% 0.9%

Danone 507,489 2.4x 2.3x 2.1x 12.4x 11.3x 10.5x 15.6x 14.1x 13.1x 19.0x 17.3x 16.2x 4.5% 5.3% 5.7% 2.8% 3.1% 3.3%

Mondelez 733,476 3.6x 3.5x 3.4x 17.9x 17.1x 16.3x 21.8x 20.5x 19.4x 21.3x 19.7x 18.2x 3.5% 4.1% 4.5% 2.0% 2.2% 2.4%



(1+2) All peers



Midsona 2,340 1.4x 1.2x 1.1x 14.5x 10.2x 8.9x 22.7x 14.3x 12.2x 19.9x 11.9x 10.3x -27.1% 10.1% 11.7% 2.7% 3.0% 3.5%

Discount/premium (1) -5% -21% -24% 22% -12% -14% 33% -12% -16% -16% -47% -48%

Discount/premium (2) -49% -56% -57% -6% -30% -35% 18% -21% -29% -7% -40% -45%

Discount/premium (1+2) -39% -48% -50% 2% -25% -29% 22% -18% -25% -10% -43% -46%

EV/Sales EV/EBITDA EV/EBIT P/E FCF yield Dividend yield

MCAP

Company (SEKm) Sales EBITDA EBIT Sales EBITDA EBIT 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e

(1) Smaller peers*

Cloetta 8,087 3% 0% 0% 2% 8% 7% 36.7% 37.4% 37.8% 15.9% 16.7% 17.1% 11.3% 12.0% 12.4% 2.1x 1.8x 1.5x

Raisio 5,256 -24% -21% -23% 4% 14% 16% 28.5% 29.1% 29.2% 15.6% 16.0% 17.7% 11.7% 12.2% 12.8% -3.1x -2.3x -1.9x

Hain Celestial 22,335 -3% -12% -16% -6% -8% -9% 20.5% 21.8% 22.5% 8.3% 8.9% 9.8% 5.4% 5.9% 6.9% 3.3x 2.3x 1.9x

Average 11,892 -8% -11% -13% 0% 5% 5% 28.6% 29.4% 29.8% 13.3% 13.9% 14.9% 9.5% 10.0% 10.7% 0.8x 0.6x 0.5x

Median 8,087 -3% -12% -16% 2% 8% 7% 28.5% 29.1% 29.2% 15.6% 16.0% 17.1% 11.3% 12.0% 12.4% 2.1x 1.8x 1.5x

(2) Larger peers*

Nestlé 2,888,588 1% 4% 3% 2% 5% 7% 50.3% 50.6% 51.0% 21.5% 22.2% 22.6% 17.5% 17.9% 18.4% 1.4x 1.3x 1.3x

Orkla 89,235 7% 8% 12% 4% 7% 7% n/a n/a n/a 15.4% 15.4% 15.6% 11.6% 11.6% 11.8% 1.0x 0.9x 0.8x

Kellogg Company 204,042 0% -1% -1% 0% 0% -1% 33.7% 34.3% 34.0% 16.9% 17.5% 17.7% 13.1% 13.6% 13.7% 3.4x 3.4x 3.3x

Kerry Group 200,563 3% 4% 4% 6% 10% 10% 41.9% 41.9% 41.8% 14.8% 15.4% 15.8% 11.8% 12.4% 12.8% 1.7x 1.2x 0.7x

Danone 507,489 3% 7% 7% 3% 6% 7% 49.0% 49.6% 50.3% 19.1% 19.9% 20.3% 15.2% 15.9% 16.2% 2.6x 2.2x 1.9x

Mondelez 733,476 -1% 4% 4% 2% 4% 4% 40.3% 40.7% 41.3% 20.3% 20.8% 21.1% 16.7% 17.3% 17.7% 3.4x 3.3x 3.1x

Average 770,566 2% 5% 5% 3% 5% 6% 43.0% 43.4% 43.7% 18.0% 18.5% 18.9% 14.3% 14.8% 15.1% 2.2x 2.0x 1.8x

Median 355,766 2% 4% 4% 3% 5% 7% 41.9% 41.9% 41.8% 18.0% 18.7% 19.0% 14.1% 14.8% 15.0% 2.1x 1.7x 1.6x

(1+2) All peers

Average 517,675 -1% -1% -1% 2% 5% 5% 37.6% 38.2% 38.5% 16.4% 17.0% 17.5% 12.7% 13.2% 13.7% 1.8x 1.6x 1.4x

Median 200,563 1% 4% 3% 2% 6% 7% 38.5% 39.0% 39.6% 15.9% 16.7% 17.7% 11.8% 12.4% 12.8% 2.1x 1.8x 1.5x

Midsona 2,340 34% 38% 38% 9% 24% 21% 29.9% 31.9% 32.4% 9.8% 11.7% 12.4% 6.2% 8.3% 9.1% 6.8x 4.6x 3.8x

CAGR ('15-'18) CAGR ('18-'21e) Gross margin EBITDA margin EBIT margin Net debt/EBITDA

Midsona



Income Statement (SEKm) Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e

Sales 610 714 773 755 786 705 765 862

COGS -402 -496 -546 -536 -570 -490 -524 -601

Gross profit 208 218 227 219 216 215 241 261

Other operating items -150 -166 -163 -147 -168 -148 -154 -196

EBITDA 58 52 64 72 48 67 87 65

Depreciation and amortisation -10 -11 -18 -13 -26 -26 -28 -30

EBITA 47 34 51 46 22 39 57 65

EO items 0 -12 1 0 -25 6 8 0

Impairment and PPA amortisation 0 0 0 0 0 0 0 0

EBIT 47 34 51 46 22 39 57 65

Net financial items 1 -4 -10 -2 -17 -14 -13 -8

Pretax profit 48 30 41 44 5 25 44 57

Tax -9 -5 -9 -11 -1 -2 -9 -13

Net profit 39 25 32 33 4 23 35 45

Minority interest 0 0 0 0 0 0 0 0

Net profit discontinued 0 0 0 0 0 0 0 0

Net profit to shareholders 39 25 32 33 4 23 35 45

EPS 0.84 0.54 0.69 0.71 0.09 0.49 0.75 0.96

EPS Adj 0.84 0.54 0.69 0.71 0.09 0.49 0.75 0.96

Total extraordinary items after tax 0 -12 1 0 -25 6 8 0

Tax rate (%) 18.8 16.7 22.0 25.0 20.0 8.0 20.5 22.0

Gross margin (%) 34.1 30.5 29.4 29.0 27.5 30.5 31.5 30.3

EBITDA margin (%) 9.5 7.3 8.3 9.5 6.1 9.5 11.4 7.6

EBITA margin (%) 7.7 4.8 6.6 6.1 2.8 5.5 7.5 7.6

EBIT margin (%) 7.7 4.8 6.6 6.1 2.8 5.5 7.5 7.6

Pretax margin (%) 7.9 4.2 5.3 5.8 0.6 3.5 5.8 6.6

Net margin (%) 6.4 3.5 4.1 4.4 0.5 3.3 4.6 5.2

Growth rates Y/Y Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e

Sales growth (%) 17.1 48.4 34.9 32.2 28.9 -1.3 -1.0 14.2

EBITDA growth (%) 28.9 48.6 106.5 20.0 -17.2 28.8 35.8 -9.1

EBIT growth (%) 27.0 30.8 142.9 -8.0 -53.2 14.7 11.8 42.3

Net profit growth (%) 62.5 66.7 190.9 -2.9 -89.7 -8.0 9.4 34.9

EPS growth (%) 62.5 66.7 190.9 -2.9 -89.7 -8.0 9.4 34.9

Adj earnings numbers Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e

EBITDA Adj 58 64 63 72 73 61 79 65

EBITDA Adj margin (%) 9.5 9.0 8.2 9.5 9.3 8.7 10.3 7.6

EBITA Adj 47 46 50 46 47 33 49 65

EBITA Adj margin (%) 7.7 6.4 6.5 6.1 6.0 4.7 6.4 7.6

EBIT Adj 47 46 50 46 47 33 49 65

EBIT Adj margin (%) 7.7 6.4 6.5 6.1 6.0 4.7 6.4 7.6

Pretax profit Adj 48 42 40 44 30 19 36 57

Net profit Adj 39 37 31 33 29 17 27 45

Net profit to shareholders Adj 39 37 31 33 29 17 27 45

Net Adj margin (%) 6.4 5.2 4.0 4.4 3.7 2.4 3.5 5.2

Midsona



Income Statement (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Sales 869 916 920 1,174 1,744 2,146 2,852 3,118 3,602 3,733

COGS -474 -495 -499 -699 -1,127 -1,435 -1,980 -2,185 -2,453 -2,523

Gross profit 395 421 421 475 617 711 872 933 1,149 1,210

Other operating items -336 -343 -340 -408 -510 -542 -642 -640 -729 -747

EBITDA 59 78 81 67 107 169 230 293 420 463

Depreciation and amortisation -12 -14 -14 -19 -25 -35 -52 -110 -122 -124

Of which leasing depreciation 0 0 0 0 0 0 0 -42 -46 -46

EBITA 47 64 67 48 82 134 178 183 299 339

EO items -6 0 0 -24 -27 -21 -11 -11 0 0

Impairment and PPA amortisation 0 0 0 0 0 0 0 0 0 0

EBIT 47 64 67 48 82 134 178 183 299 339

Net financial items -16 -11 -8 -9 -24 -22 -15 -52 -47 -47

Pretax profit 31 53 59 39 58 112 163 131 252 292

Tax 19 -2 4 27 -13 -28 -34 -25 -55 -64

Net profit 50 51 63 66 45 84 129 107 196 228

Minority interest 0 0 0 0 0 0 0 0 0 0

Net profit discontinued 0 0 0 0 0 0 0 0 0 0

Net profit to shareholders 50 51 63 66 45 84 129 107 196 228

EPS 2.20 2.24 2.77 2.32 1.06 1.89 2.77 2.29 4.22 4.90

EPS Adj 2.46 2.24 2.77 3.17 1.69 2.36 3.01 2.53 4.22 4.90

Total extraordinary items after tax -6 0 0 -24 -27 -21 -11 -11 0 0

Leasing payments 0 0 0 0 0 0 0 -47 -51 -51

Tax rate (%) 61.3 3.8 6.8 69.2 22.4 25.0 20.9 18.7 22.0 22.0

Gross margin (%) 45.5 46.0 45.8 40.5 35.4 33.1 30.6 29.9 31.9 32.4

EBITDA margin (%) 6.8 8.5 8.8 5.7 6.1 7.9 8.1 9.4 11.7 12.4

EBITA margin (%) 5.4 7.0 7.3 4.1 4.7 6.2 6.2 5.9 8.3 9.1

EBIT margin (%) 5.4 7.0 7.3 4.1 4.7 6.2 6.2 5.9 8.3 9.1

Pretax margin (%) 3.6 5.8 6.4 3.3 3.3 5.2 5.7 4.2 7.0 7.8

Net margin (%) 5.8 5.6 6.8 5.6 2.6 3.9 4.5 3.4 5.4 6.1

Growth rates Y/Y 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Sales growth (%) -26.0 5.4 0.4 27.6 48.6 23.1 32.9 9.3 15.5 3.6

EBITDA growth (%) -10.6 32.2 3.8 -17.3 59.7 57.9 36.1 27.6 43.3 10.2

EBIT growth (%) -7.8 36.2 4.7 -28.4 70.8 63.4 32.8 3.1 62.9 13.4

Net profit growth (%) 56.3 2.0 23.5 4.8 -31.8 86.7 53.6 -17.4 84.1 16.0

EPS growth (%) 56.2 2.0 23.5 -16.2 -54.5 78.7 47.0 -17.2 84.1 16.0

Profitability 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

ROE (%) 7.5 7.3 8.6 8.1 4.0 5.8 8.1 6.3 10.9 11.7

ROE Adj (%) 8.4 7.3 8.6 11.1 6.5 7.2 8.8 7.0 10.9 11.7

ROCE (%) 5.2 7.1 7.2 4.5 5.0 6.2 7.0 5.4 7.5 8.3

ROCE Adj(%) 5.8 7.1 7.2 6.7 6.7 7.2 7.4 5.8 7.5 8.3

ROIC (%) 7.9 6.5 7.5 7.2 3.6 4.3 5.1 4.1 5.6 6.4

ROIC Adj (%) 8.9 6.5 7.5 10.8 4.8 5.0 5.4 4.4 5.6 6.4

Adj earnings numbers 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

EBITDA Adj 65 78 81 91 134 190 241 304 420 463

EBITDA Adj margin (%) 7.5 8.5 8.8 7.8 7.7 8.9 8.5 9.8 11.7 12.4

EBITDA lease Adj 65 78 81 91 134 190 241 258 370 413

EBITDA lease Adj margin (%) 7.5 8.5 8.8 7.8 7.7 8.9 8.5 8.3 10.3 11.1

EBITA Adj 53 64 67 72 109 155 189 194 299 339

EBITA Adj margin (%) 6.1 7.0 7.3 6.1 6.3 7.2 6.6 6.2 8.3 9.1

EBIT Adj 53 64 67 72 109 155 189 194 299 339

EBIT Adj margin (%) 6.1 7.0 7.3 6.1 6.3 7.2 6.6 6.2 8.3 9.1

Pretax profit Adj 37 53 59 63 85 133 174 142 252 292

Net profit Adj 56 51 63 90 72 105 140 118 196 228

Net profit to shareholders Adj 56 51 63 90 72 105 140 118 196 228

Net Adj margin (%) 6.4 5.6 6.8 7.7 4.1 4.9 4.9 3.8 5.4 6.1

Midsona



Cash Flow Statement (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

EBITDA 59 78 81 67 107 169 230 293 420 463

Net financial items -16 -11 -8 -9 -24 -22 -15 -52 -47 -47

Paid tax 0 0 0 0 0 -7 -12 -25 -55 -64

Non-cash items -59 15 1 50 54 8 172 -49 0 0

Cash flow before change in WC -16 82 74 108 137 148 375 167 318 352

Change in WC 64 6 -18 -21 -68 4 -163 -82 -37 -34

Operating cash flow 48 88 56 87 69 152 212 85 281 318

CAPEX tangible fixed assets -4 -29 -54 -254 -848 -91 -357 -720 -43 -45

CAPEX intangible fixed assets 0 0 0 0 0 0 0 0 0 0

Acquisitions and disposals 0 0 0 0 0 0 0 0 0 0

Free cash flow 44 59 2 -167 -779 61 -145 -634 237 273

Dividend paid 0 11 23 25 31 47 55 58 63 70

Share issues and buybacks 0 0 0 0 0 0 0 0 0 0

Other non cash items -1 -26 -36 -14 268 -112 -501 -335 -125 -139

Decrease in net IB debt 45 48 -21 -105 -404 11 -463 -955 129 158

Balance Sheet (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Goodwill 525 503 524 516 1,082 1,234 1,408 1,517 1,517 1,517

Other intangible assets 330 343 351 551 858 895 1,058 1,401 1,384 1,368

Tangible fixed assets 11 10 9 47 55 58 254 552 535 519

Right-of-use asset 0 0 0 0 0 0 0 238 238 238

Total other fixed assets 46 42 48 81 84 102 78 65 65 65

Fixed assets 912 898 932 1,195 2,079 2,289 2,798 3,772 3,740 3,706

Inventories 97 95 100 151 244 272 482 575 655 679

Receivables 132 117 117 148 232 242 318 388 450 448

Other current assets 0 0 0 0 0 0 0 0 0 0

Cash and liquid assets 43 62 50 61 65 54 101 89 218 376

Total assets 1,184 1,172 1,199 1,555 2,620 2,857 3,699 4,824 5,063 5,208

Shareholders equity 686 710 751 877 1,349 1,550 1,630 1,734 1,867 2,025

Minority 0 0 0 0 0 0 0 0 0 0

Total equity 686 710 751 877 1,349 1,550 1,630 1,734 1,867 2,025

Long-term debt 221 192 201 319 727 706 1,217 1,923 1,923 1,923

Pension debt 0 0 0 0 0 0 0 0 0 0

Convertible debt 0 0 0 0 0 0 0 0 0 0

Leasing liability 0 0 0 0 0 0 0 238 238 238

Total other long-term liabilities 90 94 84 135 211 226 354 351 351 351

Short-term debt 0 0 0 0 0 0 0 0 0 0

Accounts payable 187 176 163 224 333 375 498 579 684 672

Other current liabilities 0 0 0 0 0 0 0 0 0 0

Total liabilities and equity 1,184 1,172 1,199 1,555 2,620 2,857 3,699 4,824 5,063 5,208

Net IB debt 178 130 151 256 660 649 1,112 2,067 1,939 1,781

Net IB debt excl. pension debt 178 130 151 256 660 649 1,112 2,067 1,939 1,781

Net IB debt excl. leasing 178 130 151 258 662 652 1,116 1,834 1,705 1,547

Capital invested 954 934 986 1,268 2,220 2,425 3,096 4,152 4,157 4,157

Working capital 42 36 54 75 143 139 302 384 421 455

EV breakdown 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Market cap. diluted (m) 251 542 580 815 1,876 2,606 2,868 2,424 2,424 2,424

Net IB debt Adj 178 130 151 258 662 652 1,116 2,071 1,943 1,785

Market value of minority 0 0 0 0 0 0 0 0 0 0

Reversal of shares and participations 0 0 0 0 0 0 0 0 0 0

Reversal of conv. debt assumed equity 0 0 0 0 0 0 0 0 0 0

EV 429 672 731 1,073 2,538 3,258 3,984 4,495 4,366 4,209

Capital efficiency 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Total assets turnover (%) 73.6 77.8 77.6 85.3 83.5 78.4 87.0 73.2 72.9 72.7

Working capital/sales (%) 8.5 4.3 4.9 5.5 6.3 6.6 7.7 11.0 11.2 11.7

Financial risk and debt service 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Net debt/equity 0.26 0.18 0.20 0.29 0.49 0.42 0.68 1.19 1.04 0.88

Net debt/market cap 0.75 0.30 0.26 0.36 0.45 0.29 0.38 0.85 0.80 0.73

Equity ratio (%) 57.9 60.6 62.6 56.4 51.5 54.3 44.1 35.9 36.9 38.9

Net IB debt adj./equity 0.26 0.18 0.20 0.29 0.49 0.42 0.68 1.19 1.04 0.88

Current ratio 1.45 1.56 1.64 1.61 1.62 1.51 1.81 1.82 1.93 2.24

EBITDA/net interest 3.69 7.09 10.13 7.44 4.46 7.68 15.33 5.60 8.88 9.84

Net IB debt/EBITDA 3.02 1.67 1.86 3.82 6.17 3.84 4.83 7.05 4.61 3.84

Net IB debt/EBITDA lease Adj 2.74 1.67 1.86 2.84 4.94 3.43 4.63 7.12 4.61 3.75

Interest cover 2.94 5.82 8.38 5.33 3.42 6.09 11.87 3.50 6.31 7.19

Midsona



Valuation and Ratios (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Shares outstanding adj. 23 23 23 28 43 44 46 46 46 46

Fully diluted shares Adj 23 23 23 28 43 45 47 46 46 46

EPS 2.20 2.24 2.77 2.32 1.06 1.89 2.77 2.29 4.22 4.90

Dividend per share Adj 0.5 1.0 1.1 1.1 1.1 1.3 1.3 1.4 1.5 1.8

EPS Adj 2.46 2.24 2.77 3.17 1.69 2.36 3.01 2.53 4.22 4.90

BVPS 30.16 31.22 33.02 30.85 31.63 35.11 35.43 37.33 40.21 43.61

BVPS Adj -7.43 -5.98 -5.45 -6.68 -13.86 -13.12 -18.17 -25.50 -22.28 -18.51

Net IB debt / share 7.8 5.7 6.6 9.0 15.5 14.7 24.2 44.5 41.8 38.4

Share price 11.02 23.84 25.49 28.66 44.00 58.50 61.60 52.20 52.20 52.20

Market cap. (m) 251 542 580 815 1,876 2,582 2,834 2,424 2,424 2,424

Valuation 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

P/E 5.0 10.6 9.2 12.3 41.7 31.0 22.2 22.8 12.4 10.7

EV/sales 0.49 0.73 0.79 0.91 1.46 1.52 1.40 1.44 1.21 1.13

EV/EBITDA 7.3 8.6 9.0 16.0 23.7 19.3 17.3 15.3 10.4 9.1

EV/EBITA 9.1 10.5 10.9 22.4 31.0 24.3 22.4 24.5 14.6 12.4

EV/EBIT 9.1 10.5 10.9 22.4 31.0 24.3 22.4 24.5 14.6 12.4

Dividend yield (%) 4.5 4.2 4.3 3.8 2.5 2.1 2.0 2.6 2.9 3.4

FCF yield (%) 17.6 10.9 0.3 -20.5 -41.5 2.3 -5.1 -26.2 9.8 11.3

Lease adj. FCF yield (%) 17.6 10.9 0.3 -20.5 -41.5 2.3 -5.1 -27.9 7.9 9.4

P/BVPS 0.37 0.76 0.77 0.93 1.39 1.67 1.74 1.40 1.30 1.20

P/BVPS Adj -1.48 -3.99 -4.68 -4.29 -3.17 -4.46 -3.39 -2.05 -2.34 -2.82

P/E Adj 4.5 10.6 9.2 9.1 26.1 24.8 20.5 20.6 12.4 10.7

EV/EBITDA Adj 6.6 8.6 9.0 11.8 18.9 17.1 16.5 14.8 10.4 9.1

EV/EBITA Adj 8.1 10.5 10.9 14.9 23.3 21.0 21.1 23.1 14.6 12.4

EV/EBIT Adj 8.1 10.5 10.9 14.9 23.3 21.0 21.1 23.1 14.6 12.4

EV/cap. employed 0.5 0.7 0.8 0.9 1.2 1.4 1.4 1.2 1.1 1.0

Investment ratios 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Capex/sales 0.5 3.2 5.9 21.6 48.6 4.2 12.5 23.1 1.2 1.2

Capex/depreciation 33.3 207.1 385.7 1,336.8 3,392.0 260.0 686.5 1,052.1 57.1 57.1

Capex tangibles/tangible fixed assets 36.4 290.0 600.0 540.4 1,541.8 156.9 140.6 130.5 8.1 8.6

Capex intangibles/definite intangibles 0 0 0 0 0 0 0 0 0 0

Depreciation on intangibles/definite intangibles 0 0 0 0 0 0 0 0 0 0

Depreciation on tangibles/tangibles 109.1 140.0 155.6 40.4 45.5 60.3 20.5 12.4 14.1 15.1

Midsona


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Production of report: 24/10/2019 07:44 CET.

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Jan Erik Gjerland +47 22 01 61 16

Jonas Bru Lien +47 22 01 61 71

Food & Beverages


Healthcare

Rickard Anderkrans +46 8 566 286 73

Daniel Thorsson +46 8 566 286 82

Victor Forssell +46 8 566 286 92

Jannick Lindegaard Denholt +45 35 46 30 13

lnvestment Companies

Derek Laliberte +46 8 566 286 78

IT

Aksel Øverland Engebakken +47 22 01 61 11


André Thormann +45 35 46 30 19

Simon Granath +46 8 566 286 32

Jesper Birch-Jensen +46 8 566 286 13

Media

Aksel Øverland Engebakken +47 22 01 61 11 Derek Laliberte +46 8 566 286 78

Metals & Mining




Oil & Gas

John Olaisen +47 22 01 61 87


Oil Service

John Olaisen +47 22 01 61 87

Haakon Amundsen +47 22 01 60 25

Lukas Daul +47 22 01 61 39


Online Gaming

Aksel Øverland Engebakken +47 22 01 61 11

Erik Moberg +46 8 566 286 87

Stefan Knutsson +46 8 566 286 37

Jesper Birch-Jensen +46 8 566 286 13

Pulp & Paper


Øystein Elton Lodgaard +47 22 01 60 26

Renewable Energy

Casper Blom +45 35 46 30 15


Retail

Fredrik Ivarsson +46 8 566 286 95

Ludvig Kapanen +46 8 566 286 91

Seafood

Martin Kaland +47 22 01 60 67

Services


Victor Forssell +46 8 566 286 92

Shipping & Transport

Dennis Anghelopoulos +47 22 01 60 37

Casper Blom +45 35 46 30 15

Lukas Daul +47 22 01 61 39

Telecom Operators

Peter Kurt Nielsen +44 207 905 5631

Utilities



Small Caps


Laurits Louis Kjaergaard +45 35 46 30 12

Norway Sweden Denmark United Kingdom USA Germany Singapore

Pb. 1444 Vika Box 7269 Forbindelsesvej 12, 10 Paternoster Row, 5th fl 850 Third Avenue, Suite 9-C Schillerstrasse 2, 5. OG 10 Collyer Quay

NO-0115 OSLO Norway

SE-103 89 STOCKHOLM Sweden

DK-2100 COPENHAGEN Denmark

LONDON EC4M 7EJ UK

NEW YORK, NY 10022 USA

DE-60313 FRANKFURT

Germany

Ocean Financial Center

#40-07, Singapore 049315

Tel: +47 22 01 60 00 Tel: +46 8 566 286 00 Tel: +45 35 46 61 00 Tel: +44 20 7905 5600 Tel. +1 212 605 3800 Tel +49 69 96 86 96 0 Tel +65 6808 6082

Fax: +47 22 01 60 60 Fax: +46 8 566 286 01 Fax: +45 35 46 61 10 Fax: +44 20 7905 5601 Fax. +1 212 605 3801 Fax +49 69 96 86 96 99

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Midsona - introduce.se...Midsona 24 October 2019 ABG Sundal Collier 4 Estimates Aside from the...

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