Northbaze reached net sales of SEK35m, a y/y growth/decline of -27%. It came in lower than our estimates of SEK42m. Gross margin came in at 35%, vs our est of 40%. Ebitda was SEK-2,7m, vs. our estimate of SEK-2,9m, which aligns with our estimate.

With the acquisition of Skalhuset last December, Redeye anticipates an exciting year for Northbaze in 2024. Following the acquisition, our initial estimate projected Skalhuset to contribute approximately SEK98m to the top line. However, in the latest Q4 report, the CEO said the acquisition would add SEK90m. Consequently, we adjusted our sales estimate downward and made minor modifications to the margins. Despite recognizing the challenging nature of the underlying market, Northbaze is now in a much-improved position due to streamlined organizational structures and implemented cost-cutting programs. We anticipate the NetDebt/EBITDA ratio to range between 1.1 and 1.3x by the end of 2024.

We are adjusting our valuation range downward to SEK0.10 - SEK 1.57 (SEK0.22 - SEK2.20) with a Base case at SEK0.71 (0.8). As of closing on 22nd of February 2024, Northbaze’s market capitalisation stood at SEK61m, resulting in an Enterprise Value (EV) of SEK76m. This corresponds to an LTM EV/Sales multiple of 0.7x.