Complete package solutions give Svedbergs a competitive advantage. Svedbergs´ package solution covering the complete bathroom, as well as a diverse product portfolio, contribute to a competitive advantage. Through the Macro design acquisition, the product portfolio consists of both medium- and premium priced products contributing to a wider assortment. Longstanding presence on the Swedish market further increases competitiveness.

Downtrend in Swedish construction and retail sales. The Nordic market for bathroom interiors is forecasted to slow down, construction taking the heaviest toll of a -21% decrease and consumer retail sales decreasing –5% 2018-2021. An in total decreasing sales for Svedbergs in 2020 by –5.2%. Increased retail and online focus could, however, suppress the impact and leave sales in Sweden with a -5% decrease 2018-2021.

Weak SEK affecting margins. A depressed SEK in relation to USD and EUR have affected margins and import costs are at a decade high, COGS have risen by 6% 2014-2018 to 58% of sales. However, a 4% price raise increase margins for 2019 with 4%.

Strong growth in Finland. The Finnish market is expected to continue growing at 10% CAGR 2018- 2021 due to expected increase in renovations. Combined with strong focus on the Finnish market as well as previous stable growth of 14% CAGR 2015-2018, a further upside is estimated.

Target P/E-ratio of 14x for 2012E indicates potential upside. Positive outlook for 2023-2024 and slightly increasing margins for 2019-2021 expect P/E-ratio for 2021 to improve to 14x in base case. Peer valuation indicates a target share price of 31.5 SEK. In a base case scenario Svedbergs is expected to grow at 0.5% CAGR and EBIT-margins are expected to hover around 10% for 2019-2021, despite expectations for the market to decline due to a -14% decrease in construction sales.

Analysts: Alice Rosberg Kronholm & Marcus Von Schéele

Svedbergs.Sista-1