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
Active
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
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%.
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.
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 | |||||
---|---|---|---|---|---|
SEKm | 2023 | 2024 | 2025e | 2026e | 2027e |
Net Sales | 83.5 | 95.0 | 91.1 | 104.7 | 115.2 |
Sales Growth | 35.7% | 13.7% | -4.1% | 15.0% | 10.0% |
EBITDA | 49.2 | 67.4 | 60.5 | 64.5 | 71.0 |
EBIT | 34.6 | 48.0 | 60.5 | 64.5 | 71.0 |
EBIT Margin | 41.4% | 50.5% | 66.4% | 61.6% | 61.6% |
Net Income | 31.1 | 33.5 | 45.6 | 51.2 | 56.3 |
EV/Sales | 3.2 | 3.2 | 2.3 | 1.5 | 0.9 |
EV/EBIT | 7.7 | 6.4 | 3.5 | 2.4 | 1.4 |
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