Embellence Group: Premium wallpaper keeps growing - ABG
This is a third party research report and does not necessarily reflect our views or values
Q4 report due 21 February
We forecast sales of SEK 190m, adj. EBITA of SEK 24m
Share trading at '23-'24e EV/EBITA of 6-5x
Hospitality and premium holds up relative consumer segment
In the DIY-focused Nordic region, we expect Embellence to face a tough Q4e characterised by surging inflation, electricity costs and interest rates. With brands in the Nordics mainly geared towards a mid-price consumer segment, we expect to see lower demand and pencil in an organic decline of 8% in Q4e. On a positive note, we anticipate that Europe and RoW will hold up better. Driven by a favourable premium niche and exposure to hospitality which sees pent-up demand after the pandemic, we forecast organic growth of 1% and 2% respectively for Europe and RoW in Q4e. All in all, we forecast net sales of SEK 190m in Q4e, corresponding to 9% y-o-y growth (-4% org.), supported by the Artscape acquisition. We believe Embellence will be able to protect gross margins with rolled-out price increases and input costs have started to level out. We forecast an adj. EBITA of SEK 24m in Q4e, corresponding to a margin of 12.5% (-2pp y-o-y).
We forecast sales of SEK 190m, adj. EBITA of SEK 24m
Share trading at '23-'24e EV/EBITA of 6-5x
Hospitality and premium holds up relative consumer segment
In the DIY-focused Nordic region, we expect Embellence to face a tough Q4e characterised by surging inflation, electricity costs and interest rates. With brands in the Nordics mainly geared towards a mid-price consumer segment, we expect to see lower demand and pencil in an organic decline of 8% in Q4e. On a positive note, we anticipate that Europe and RoW will hold up better. Driven by a favourable premium niche and exposure to hospitality which sees pent-up demand after the pandemic, we forecast organic growth of 1% and 2% respectively for Europe and RoW in Q4e. All in all, we forecast net sales of SEK 190m in Q4e, corresponding to 9% y-o-y growth (-4% org.), supported by the Artscape acquisition. We believe Embellence will be able to protect gross margins with rolled-out price increases and input costs have started to level out. We forecast an adj. EBITA of SEK 24m in Q4e, corresponding to a margin of 12.5% (-2pp y-o-y).