Northbaze reached net sales of SEK45.5m, a y/y increase of 42%, mainly due to the Lowwi AB acquisition. Sales came in lower than our estimates of SEK53m. Gross margin came in at SEK21m with a gross margin of 47%, vs our est of SEK22m, 41%. Ebitda was SEK1.9m (4.4% margin), vs our estimate of SEK2.1m, roughly in line with our estimate. Cash flows from operations amounted to SEK-5.4m, resulting in a cash position of SEK3.6m at the end of the period.

Due to the discontinued distribution business after Teknikmagasinet's bankruptcy, we adjust our sales forecast downwards by cSEK25m for the full year. We also trim total sales by 4% from SEK216m to SEK183m due to overall soft demand for the rest of the year. At the same time, we adjust the gross margin upwards, thus adjusting the estimated EBITDA margin upwards by 2pp 2025 to 9% and 2pp to 10% for 2026 as we believe the work within the company for the past years will yield better profitability for the long term.

Redeye adjusts the valuation range to SEK0.12 - SEK 1.43 (SEK0.10 to SEK1.57) with a Base case at SEK0.65 (0.71), a decrease of 8%. Northbaze share closed at SEK0.342, implying an upside potential of 90% to our base case. As of closing on 23nd of May 2024, Northbaze’s market capitalisation stood at SEK50m, resulting in an Enterprise Value (EV) of SEK71m. This corresponds to an EV/Sales multiple of 0.4x 2024E. We believe Northbase is one of the best picks compared to peers at the moment because of better profitability outlook.