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BHG Group

BHG Group

Home improvement online

BHG has grown to be the leading online retailer of DIY and home furnishing goods in the Nordics, with a market share of ~30%. The group has also expanded into Eastern Europe through the acquisition of Furniture1. The drop-shipping model is a key success factor for BHG, but it has recently established an in-house solution for last-mile deliveries, allowing for an increased range of services.

We believe that BHG could reap the benefits of a fast-growing online market within Home Improvement. In addition, we see room for the company to fuel growth further through M&A, while a greater share of proprietary brands could support its margins going forward.

A global recession caused by COVID-19 could put a dent in demand. We do not rule out that new market entrants could compete for BHG’s No.1 spot. BHG runs a clear acquisition-driven agenda. Hence, there are naturally some M&A related risks.

SEKm 2019 2020e 2021e
Sales 6213 7508 8559
Sales growth (%) 24,9 20,9 14
EBITDA 468 621 751
EBITDA margin (%) 7,5 8,3 8,8
EBIT adj 290 361 474
EBIT adj margin (%) 4,7 4,8 5,5
Pretax profit 233 343 460
EPS rep 1,64 2,46 3,37
EPS growth (%) 253,2 49,4 37,3
EPS adj 1,98 2,77 3,69
DPS 0 0 0
EV/EBITDA (x) 15,7 15,7 12,7
EV/EBIT adj (x) 25,3 27 20,1
P/E (x) 35,5 32,9 24
P/E adj (x) 29,4 29,2 21,9
EV/sales (x) 1,2 1,3 1,1
FCF yield (%) 0,7 3,8 5,4
Dividend yield (%) 0 0 0
Net IB debt/EBITDA 2,3 1,7 1,2
SEKm 2019 2020e 2021e
Sales 6213 7508 8559
COGS -4722 -5671 -6445
Gross profit 1491 1837 2114
Other operating items -1023 -1217 -1363
EBITDA 468 621 751
Depreciation on tangibles -44 -51 -53
Depreciation on intangibles 0 0 0
EBITA 323 405 518
Goodwill impairment charges 0 0 0
Other impairment and amortisation -41 -43 -43
EBIT 282 361 474
Other financial items 0 0 0
Net financial items -49 -19 -15
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 233 343 460
Tax -53 -76 -95
Net profit 180 267 365
Minority interest -4 -3 -3
Net profit discontinued 0 0 0
Net profit to shareholders 177 264 362
EPS 1,64 2,46 3,37
EPS Adj 1,98 2,77 3,69
Total extraordinary items after tax -7,5 0 0
Tax rate (%) -22,8 -22,1 -20,6
Gross margin (%) 24 24,5 24,7
EBITDA margin (%) 7,5 8,3 8,8
EBITA margin (%) 5,2 5,4 6
EBIT margin (%) 4,5 4,8 5,5
Pretax margin (%) 3,8 4,6 5,4
Net margin (%) 2,9 3,6 4,3
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 24,9 20,9 14
EBITDA growth (%) 205,8 32,7 21
EBIT growth (%) 223,6 28,1 31,2
Net profit growth (%) 254,7 48 36,9
EPS growth (%) 253,2 49,4 37,3
Profitability 2019 2020 2021
ROE (%) 6,2 8,7 10,8
ROE Adj (%) 7,5 9,8 11,9
ROCE (%) 6,7 8,2 9,8
ROCE Adj(%) 8 9,1 10,7
ROIC (%) 5,1 5,7 7,3
ROIC Adj (%) 5,2 5,7 7,3
Adj earnings numbers 2019 2020 2021
EBITDA Adj 475 621 751
EBITDA Adj margin (%) 7,7 8,3 8,8
EBITA Adj 330 405 518
EBITA Adj margin (%) 5,3 5,4 6
EBIT Adj 290 361 474
EBIT Adj margin (%) 4,7 4,8 5,5
Pretax profit Adj 281 386 503
Net profit Adj 217 300 399
Net profit to shareholders Adj 213 297 397
Net Adj margin (%) 3,5 4 4,7
SEKm 2019 2020e 2021e
EBITDA 468 621 751
Net financial items -49 -19 -15
Paid tax -53 -76 -95
Non-cash items 44 -21 -31
Cash flow before change in WC 410 505 610
Change in WC -57 -27 -9
Operating cash flow 391 447 601
CAPEX tangible fixed assets -98 -115 -128
CAPEX intangible fixed assets 1 0 0
Acquisitions and disposals -252 0 0
Free cash flow 43 332 472
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -887 -320 -192
Decrease in net IB debt -559 10 191
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 2897 3025 3025
Indefinite intangible assets 0 0 0
Definite intangible assets 1294 1371 1427
Tangible fixed assets 51 70 89
Other fixed assets 20 20 20
Fixed assets 4720 5052 5214
Inventories 668 785 906
Receivables 359 410 473
Other current assets 0 0 0
Cash and liquid assets 270 444 722
Total assets 6018 6690 7315
Shareholders equity 2890 3159 3522
Minority 35 37 37
Total equity 2925 3197 3559
Long-term debt 814 816 816
Pension debt 23 23 23
Convertible debt 0 0 0
Deferred tax 250 258 258
Other long-term liabilities 507 596 596
Short-term debt 48 101 101
Accounts payable 535 601 685
Other current liabilities 459 533 623
Total liabilities and equity 6018 6690 7315
Net IB debt 1066 1056 865
Net IB debt excl. pension debt 1043 1033 842
Capital invested 4747 5106 5278
Working capital 34 61 71
EV breakdown 2019 2020 2021
Market cap. diluted (m) 6270 8686 8686
Net IB debt Adj 1066 1056 865
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 7336 9742 9551
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 114,3 118,2 122,2
Capital invested turnover (%) 144,8 152,4 164,9
Capital employed turnover (%) 158,9 167,4 173,7
Inventories / sales (%) 9,4 9,7 9,9
Customer advances / sales (%) 0 0 0
Payables / sales (%) 8,3 7,6 7,5
Working capital / sales (%) 0,1 0,6 0,8
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 36,4 33 24,3
Net debt / market cap (%) 23,5 12,2 10
Equity ratio (%) 48,6 47,8 48,7
Net IB debt adj. / equity (%) 36,4 33 24,3
Current ratio (%) 111,9 117,4 131,7
EBITDA / net interest (%) 958,6 3282,6 5150,7
Net IB debt / EBITDA (%) 227,8 170,1 115,2
Interest cover (%) 1019,1 1681,7 2294,9
SEKm 2019 2020e 2021e
Shares outstanding adj. 107 107 107
Fully diluted shares Adj 107 107 107
EPS 1,64 2,46 3,37
Dividend per share Adj 0 0 0
EPS Adj 1,98 2,77 3,69
BVPS 26,91 29,43 32,8
BVPS Adj -12,11 -11,51 -8,66
Net IB debt / share 9,9 9,8 8,1
Share price 42,15 80,9 80,9
Market cap. (m) 4526 8686 8686
Valuation 2019 2020 2021
P/E 35,5 32,9 24
EV/sales 1,18 1,3 1,12
EV/EBITDA 15,7 15,7 12,7
EV/EBITA 22,7 24,1 18,5
EV/EBIT 26 27 20,1
Dividend yield (%) 0 0 0
FCF yield (%) 0,7 3,8 5,4
P/BVPS 2,17 2,75 2,47
P/BVPS Adj -4,82 -7,03 -9,34
P/E Adj 29,4 29,2 21,9
EV/EBITDA Adj 15,4 15,7 12,7
EV/EBITA Adj 22,2 24,1 18,5
EV/EBIT Adj 25,3 27 20,1
EV/cap. employed 1,7 2,1 1,9
Investment ratios 2019 2020 2021
Capex / sales 1,6 1,5 1,5
Capex / depreciation 219,8 225,3 240,2
Capex tangibles / tangible fixed assets 194,1 164,1 145
Capex intangibles / definite intangibles -0,1 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 87,1 72,7 60,4

Equity research

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Media

BHG Group - Company presentation with CEO Adam Schatz and CFO Jesper Flemme (in English)

Main shareholders - Bygghemma

Main shareholders Share capital % Voting shares % Verified
EQT 20.0 % 20.0 % 31 Mar 2020
FSN Capital 10.0 % 10.0 % 30 Apr 2020
Handelsbanken Fonder 7.7 % 7.7 % 30 Apr 2020
Capital Group 6.2 % 6.2 % 31 Mar 2020
Swedbank Robur Fonder 5.7 % 5.7 % 30 Apr 2020
Lannebo Fonder 5.0 % 5.0 % 31 Mar 2020
Mikael Olander 5.0 % 5.0 % 12 Nov 2019
Arbejdsmarkedets Tillægspension (ATP) 4.6 % 4.6 % 31 Dec 2019
Cliens Fonder 3.1 % 3.1 % 30 Apr 2020
Janus Henderson Investors 2.4 % 2.4 % 30 Apr 2020
Source: Holdings by Modular Finance AB

Insider list - Bygghemma

Name Quantity Code Date
Adam Schatz + 3 700 BUY 28 Feb 2020
Martin Edblad - 770 102 SELL 12 Nov 2019
mikael olander - 496 532 SELL 12 Nov 2019
Adam Schatz + 1 200 BUY 18 Jul 2019
Adam Schatz + 826 BUY 18 Jul 2019
Adam Schatz + 474 BUY 18 Jul 2019
Adam Schatz + 4 000 BUY 7 Jun 2019
Frans Peter Rosvall + 5 000 BUY 3 Jun 2019
Johan Hähnel + 23 008 BUY 31 May 2019
Adam Schatz + 92 030 BUY 31 May 2019

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