Stille Q3 2024: Sustainable growth and expanding margins at a discount
Research Update
2024-10-25
08:00
Analyst Q&A
Closed
Filip Einarsson answered 2 questions.
Redeye makes negligible changes to its forecasts and valuation following Stille's Q3 report. The company has positively revised its financial targets, and based on our 2025e estimate the share currently trades at 12x 2025e EV/EBITDA.
Filip Einarsson
Sales were 5% below our estimates, impacted by currency headwinds and the company showed slightly higher selling expenses than we had pencilled in, resulting in a 15% shortfall in EBITDA. Despite this, margins improved, with the EBITDA margin rising to 24% from 23% in Q2, and the gross margin increased to nearly 52%, up from 46-49% over the past year.
In the Q3 report, the company revised its financial targets by increasing the targeted EBITDA margin from 20 to 25, reflecting its consistent performance above that level of profitability. Furthermore, as the company continues to generate strong cash flow, holding close to SEK100m in cash with a Net debt/EBITDA ratio of 0.2x, Stille is well-positioned to consolidate its targeted niche markets.
We make slight downward revisions of less than 5% to our forecasts based on Q3 results, updating our base case to SEK259 (previously SEK261). At yesterday's close (SEK227), Stille trades at an EV/EBITDA multiple of 17.6x-9.1x for 2024e-2026e, which we find attractive, as it represents a discount compared to its historical valuation, where the average multiple over the past five years is 24x.
| SEKm | 2022 | 2023 | 2024e | 2025e | 2026e |
| Revenues | 246.4 | 294.9 | 554.8 | 625.4 | 700.0 |
| Revenue Growth | 31.7% | 19.7% | 88.1% | 12.7% | 11.9% |
| EBITDA | 42.0 | 59.3 | 114.5 | 168.1 | 189.0 |
| EBIT | 32.4 | 44.9 | 86.9 | 136.8 | 154.0 |
| EBITDA Margin | 17.0% | 20.1% | 20.6% | 26.9% | 27.0% |
| EV/Sales | 2.3 | 2.7 | 3.6 | 3.2 | 2.4 |
| EV/EBITDA | 13.6 | 13.2 | 17.6 | 12.0 | 9.1 |
| Stille: Deviation table | ||||||||
| Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024a | Q3 2024e | dev. % | dev. abs | |
| Net sales | 70.1 | 77.3 | 139.7 | 142.6 | 127.9 | 134.7 | -5% | -6.8 |
| Sales growth y/y | 18% | 25% | 93% | 90% | 82% | 92% | ||
| Sales growth q/q | -7% | 10% | 81% | 2% | -10% | -6% | ||
| Gross profit | 32.7 | 35.2 | 67.9 | 70.3 | 66.3 | 66.0 | 0% | 0.3 |
| Gross margin | 47% | 46% | 49% | 49% | 52% | 49% | ||
| OPEX | -20.8 | -21.3 | -57.6 | -44.5 | -42.9 | -37.0 | 16% | -5.9 |
| Selling expenses | -16.0 | -17.2 | -22.0 | -38.2 | -31.0 | -26.9 | ||
| Administrative expenses | -4.5 | -4.3 | -19.9 | -4.1 | -11.7 | -9.4 | ||
| Other operating expenses/income | -0.3 | 0.2 | 1.0 | 1.1 | -0.2 | 0.7 | ||
| EBITDA | 15.5 | 17.7 | 17.0 | 32.6 | 30.2 | 35.7 | -15% | -5.5 |
| EBITDA margin | 22% | 23% | 12% | 23% | 24% | 27% | ||
| EBIT | 11.9 | 14.0 | 10.3 | 25.7 | 23.4 | 29.0 | -19% | -5.5 |
| EBIT margin | 17% | 18% | 7% | 18% | 18% | 22% | ||
Disclosures and disclaimers