Fable Media Group: Solid 2025 guidance

Anton Hoof answers the top questions on this Research Update

Research Update

2025-02-21

07:25

Analyst Q&A

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Ends in 2 days and 8 hours

Anton Hoof will answer the top questions on this Research Update

Ends in 2 days and 8 hours

Redeye updates its estimates after reviewing Fable Media Group’s Q4 report, which was in line with our expectations. The company’s 2025 guidance indicates that it will mitigate the negative impact of the Brazilian market, and with earn-outs soon fully settled, the balance sheet cleanup is one step closer to completion

Anton Hoof

Hjalmar Ahlberg

Q4 results – In line with expectations

FMG reported another growth quarter with solid margins. Net sales amounted to SEK23.9m, an increase of 13% y/y (14% excluding the discontinued Viistek Media), and 4% higher than our expectations of SEK23m. In terms of profitability, FMG reported an EBITDA of SEK16.5m and EBIT of SEK15.5m, in line with our estimates of SEK16m and SEK15.5m, respectively. This corresponds to EBITDA and EBIT margins of 69% and 65%.

Challenges in the Brazilian market – A Bump in the road?

FMG followed up its downward 2024e guidance revision by announcing reduced commissions from the Brazilian market due to new legislation in the country. As such, we understand the weak sentiment surrounding the stock. The question investors should ask themselves now is whether this is just a bump in the road or indicative of structural changes for FMG. In our view, it is the former (which also the 2025 guidance indicates), and this could represent a good entry point into the stock. That said, before sentiment improves, we believe the company must demonstrate that this is indeed the case.

Valuation and estimate changes

Following the Q4 report, we have made limited revisions to our estimates, increasing sales by 3% for 2025e-2026e due to somewhat stronger sales than expected in the quarter. We expect the negative impact from the Brazilian market to be most significant at the beginning of the year, with new referred FTDs gradually offsetting the effect throughout 2025. We reiterate our base case of SEK9 and fair value range of SEK4-16.

Key Financials
SEKm202320242025e2026e2027e
Net Sales83.595.091.1104.7115.2
Sales Growth35.7%13.7%-4.1%15.0%10.0%
EBITDA49.267.460.564.571.0
EBIT34.648.060.564.571.0
EBIT Margin41.4%50.5%66.4%61.6%61.6%
Net Income31.133.545.651.256.3
EV/Sales3.23.22.31.50.9
EV/EBIT7.76.43.52.41.4

Q4 Review

After adjusting its 2024 guidance, the Q4 figures were largely known, and the report was, therefore, in line with our expectations. However, although the 2024 forecast was revised downward, both Q4 and the full year 2024 have been strong in our view, with approximately 14% growth, EBITDA margins exceeding 70%, and solid cash conversion.

Looking at Q4 numbers, net sales amounted to SEK23.9m, an increase of 13% y/y (14% excluding the discontinued Viistek Media), and 4% higher than our expectations of SEK23m. The company referred 75,000 FTDs (First-Time Depositors) to its partners for the full year of 2024, whereas 27,679 were referred in Q4, indicating that Q4 was impressively strong in this regard.

Disclosures and disclaimers