North Media A/S : Aktieanalyse, 1. marts 2024, ABG Sundal Collier

Equity Research - 1 March 2024 06:12 CET

North Media

Cutting estimates amid soft guidance

• Pre-announcedQ4 revenues roughly in line, EBIT 6% below
• We cut estimates on soft FY'24 guidance - costs to continue up
• Extent of possible SDR synergies still a question mark

Pre-announced Q4 revenues roughly in line, EBIT 6% below

North Media had pre-announced headline figures. Q4 group revenues were 1% below ABGSCe, declining 4% y-o-y. Group EBIT came in 6% short of ABGSCe, driven by significantly higher unallocated costs (in connection with the SDR acquisition). North Media thus reached its FY'23 guidance, seeing revenues declining ~5% y-o-y in '23 with an EBIT margin of ~16% (down ~3pp vs. '22).

We cut estimates on soft guidance - costs to continue up

We cut '24e-'26e EBIT by 26-8% on a mix of lowered top-line estimates, lower EBITDA margins, and higher D&A estimates than previously anticipated related to the SDR acquisition. North Media guides for

38-45% revenue growth (ABGSCe 42%) and an EBIT margin of 8-11% (ABGSCe 10%) vs. 16% in '23. While margin-dilutive SDR drives part of the contraction, we also expect ~3pp lower margins in FK on a flat top line (which, however, will be an improvement from the decline in '23 that was driven by unfavourable external factors) and increased staff costs. In addition, we forecast Digital Services margins to contract 6pp y-o-y in '24e due to growth investments related to the product offering of the well- performing BoligPortal and a mix of flattish top-lines and higher costs in the poorly-performing Ofir and especially BeKey.

Extent of possible SDR synergies still a question mark

We were left fairly disappointed by the absence of more clear-cut comments on synergies between SDR and FK. Management, however, said it hopes to see synergies showing in the numbers from '25. We consider packaging/distribution as the most obvious area to extract such from. We now model a slight margin expansion in '24e-'26e for SDR on a fairly flat top line (but more clarification on synergies in the future could provide estimate upside). We adjust our FVR to DKK 58-97(61-101).

Analyst:	[e-mail], [phone]
DKKm		2022	2023	2024e	2025e	2026e
Sales		995	949	1,348	1,353	1,329
EBITDA		219	177	200	231	255
EBITDA margin (%)	22.0	18.6	14.8	17.0	19.2
EBIT adj.		192	150	136	173	199
EBIT adj. margin (%)	19.2	15.8	10.1	12.8	15.0
Pretax profit		1	340	255	219	249
EPS		0.11	13.99	10.53	9.05	10.32
EPS adj.		15.61	6.20	5.44	7.08	8.23
Sales growth (%)	-3.7	-4.6	42.0	0.4	-1.8
EPS growth (%)	-99.2	12,423.9	-24.7	-14.1	14.1

Source: ABG Sundal Collier, Company Data

Reason: Post-results comment

Commissioned research

Not rated

Media

Estimate changes (%)

	2024e	2025e	2026e
Sales	-3.2	-2.2	-2.0
EBIT	-26.1	-15.5	-8.0
EPS	12.3	-12.9	-6.5
Source: ABG Sundal Collier

NORTHM-DK/NORTHM DC

Share price (DKK)	29/2/2024	69.60
Fair value range		58.0-97.0
MCap (DKKm)		1,251
MCap (EURm)		168
No. of shares (m)		20.1
Free float (%)		34.3
Av. daily volume (k)		9

Next event			Q1 Report 16 May 2024
Performance
85.00
80.00
75.00
70.00
65.00
60.00
55.00
Apr-23	Jun-23	Aug-23	Oct-23Dec-23Feb-24

NORTHM-DK		OMX Copenhagen Allshare

	2024e	2025e	2026e
P/E (x)	6.6	7.7	6.7
P/E adj. (x)	12.8	9.8	8.5
P/BVPS (x)	1.03	0.95	0.89
EV/EBITDA (x)	2.5	1.7	1.0
EV/EBIT adj. (x)	3.6	2.2	1.3
EV/sales (x)	0.36	0.28	0.20
ROE adj. (%)	8.4	10.1	10.9
Dividend yield (%)	5.7	7.2	7.2
FCF yield (%)	9.7	10.2	11.6
Le. adj. FCF yld. (%)	9.7	10.2	11.6
Net IB debt/EBITDA (x)	-4.1	-4.0	-4.0
Le. adj. ND/EBITDA (x)	-4.3	-4.2	-4.3

Disclosures and analyst certifications are located on pages 10-11 of this report.

This research product is commissioned and paid for by the company covered in this report. As such, this report is deemed to constitute an acceptable minor non-monetary benefit (i.e. not investment research) as defined in MiFID II.

North Media

Company description

North Media is the only media company listed on the OMX Copenhagen Stock Exchange. While the company started as a distributor of unaddressed printed advertisements and newspapers in 1965, the company is today considered both a value and a growth company. The company's Last Mile segment (84% of '22 revenues) is its cash cow, but it is operating in an industry with structurally declining volumes. Its Digital Services segments (16% of '22 revenues) consists of BoligPortal (home rentals platform), Ofir (job portal), and BeKey (digital access solutions).

Risks

There are three main risks to the company: 1) the implementation of regulations or bans against physical advertisements and newspapers on the back of environmental concerns, which in the worst case could put the Last Mile segment almost completely out of business, 2) stiff competition facing the Digital Services segments, and 3) difficulties in finding new growth opportunities in the Digital Services segments.

Annual revenue and margins

Quarterly revenue and margins

Source: ABG Sundal Collier, company data	Source: ABG Sundal Collier, company data
Annual EPS and DPS	Total cash and liquid assets

Source: ABG Sundal Collier, company data	Source: ABG Sundal Collier, company data
Newsprint prices (USD/tonne)	No. of Danish households and share of NejTak

Source: ABG Sundal Collier, RISI	Source: ABG Sundal Collier, FK Distribution

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North Media

Deviation table

Source: ABG Sundal Collier, company data

Estimate revisions

Source: ABG Sundal Collier, company data

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North Media

ABGSCe vs. FY'24 guidance

Source: ABG Sundal Collier, company data

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North Media

Quarterly numbers and estimates

Source: ABG Sundal Collier, company data

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North Media

Annual numbers and estimates

Source: ABG Sundal Collier, company data

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North Media

Income Statement (DKKm)	2017	2018	2019	2020	2021	2022	2023		2024e	2025e	2026e
Sales	-	-	1,046	1,045	1,034	995	949		1,348	1,353	1,329
COGS	-	-	-523	-426	-413	-432	-411		-658	-648	-624
Gross profit	0	0	523	620	621	563	538		690	705	705
Other operating items	0	0	-330	-349	-328	-344	-361		-490	-474	-450
EBITDA	0	0	193	270	292	219	177		200	231	255
Depreciation and amortisation	0	0	-27	-30	-48	-28	-27		-63	-58	-56
of which leasing depreciation	-	-	0	0	0	0	0		0	0	0
EBITA	0	0	166	240	244	192	150		136	173	199
EO Items	-	-	0	0	0	0	0		0	0	0
Impairment and PPA amortisation	0	0	4	0	0	0	0		0	0	0
EBIT	-	-	170	240	244	192	150		136	173	199
Net financial items	0	0	-12	-6	-5	-3	-2		-7	-5	-4
Pretax profit	0	0	276	388	347	1	340		255	219	249
Tax	0	0	-64	-85	-73	1	-76		-55	-48	-54
Net profit	0	0	212	303	274	2	264		199	171	195
Minority interest	-	-	0	0	0	0	0		0	0	0
Net profit discontinued	-	-	-6	4	0	0	0		0	0	0
Net profit to shareholders	0	0	205	307	274	2	264		199	171	195
EPS	-	0.00	11.04	16.66	14.71	0.11	13.99		10.53	9.05	10.32
EPS adj.	-	0.00	5.83	10.10	10.33	15.61	6.20		5.44	7.08	8.23
Total extraordinary items after tax	0	0	94	121	81	-291	147		96	37	40
Leasing payments	0	0	0	0	0	0	0		0	0	0
Tax rate (%)	--	--	23.3	21.9	21.2	-50.0	22.3		21.8	21.8	21.8
Gross margin (%)	--	--	50.0	59.3	60.0	56.6	56.7		51.2	52.1	53.1
EBITDA margin (%)	--	--	18.5	25.9	28.3	22.0	18.6		14.8	17.0	19.2
EBITA margin (%)	--	--	15.9	23.0	23.6	19.2	15.8		10.1	12.8	15.0
EBIT margin (%)	--	--	16.3	23.0	23.6	19.2	15.8		10.1	12.8	15.0
Pre-tax margin (%)	--	--	26.4	37.1	33.6	0.1	35.8		18.9	16.2	18.8
Net margin (%)	--	--	20.2	29.0	26.5	0.2	27.9		14.8	12.6	14.7
Growth Rates y-o-y	-	-	-	-	-	-	-		-	-	-
Sales growth (%)	--	--	--	-0.0	-1.1	-3.7	-4.6		42.0	0.4	-1.8
EBITDA growth (%)	--	--	--	40.0	8.1	-25.0	-19.3		12.9	15.4	10.6
EBITA growth (%)	--	--	--	44.8	1.7	-21.6	-21.7		-9.0	26.8	15.0
EBIT growth (%)	--	--	--	41.3	1.7	-21.6	-21.7		-9.0	26.8	15.0
Net profit growth (%)	--	--	--	43.3	-9.7	-99.2	12,490.5		-24.7	-14.1	14.1
EPS growth (%)	--	--	--	50.9	-11.7	-99.2	12,423.9		-24.7	-14.1	14.1
Profitability	-	-	-	-	-	-	-		-	-	-
ROE (%)	--	0.0	33.9	39.5	27.9	0.2	24.6		16.3	12.9	13.6
ROE adj. (%)	--	0.0	17.8	24.0	19.6	28.3	10.9		8.4	10.1	10.9
ROCE (%)	--	0.0	37.7	43.1	31.7	0.5	28.1		18.8	15.0	16.1
ROCE adj. (%)	--	0.0	20.7	26.1	22.4	17.3	12.7		10.0	11.8	12.9
ROIC (%)	--	--	38.3	62.6	65.2	86.3	26.9		21.5	29.1	34.3
ROIC adj. (%)	--	--	38.3	62.6	65.2	86.3	26.9		21.5	29.1	34.3
Adj. earnings numbers	-	-	-	-	-	-	-		-	-	-
EBITDA adj.	0	0	193	270	292	219	177		200	231	255
EBITDA adj. margin (%)	--	--	18.5	25.9	28.3	22.0	18.6		14.8	17.0	19.2
EBITDA lease adj.	0	0	193	270	292	219	177		200	231	255
EBITDA lease adj. margin (%)	--	--	18.5	25.9	28.3	22.0	18.6		14.8	17.0	19.2
EBITA adj.	0	0	166	240	244	192	150		136	173	199
EBITA adj. margin (%)	--	--	15.9	23.0	23.6	19.2	15.8		10.1	12.8	15.0
EBIT adj.	0	0	166	240	244	192	150		136	173	199
EBIT adj. margin (%)	--	--	15.9	23.0	23.6	19.2	15.8		10.1	12.8	15.0
Pretax profit Adj.	0	0	149	234	244	196	151		131	171	199
Net profit Adj.	0	0	114	182	192	293	117		103	134	156
Net profit to shareholders adj.	0	0	107	186	192	293	117		103	134	156
Net adj. margin (%)	--	--	10.9	17.4	18.6	29.5	12.4		7.6	9.9	11.7
Source: ABG Sundal Collier, Company Data
Cash Flow (DKKm)	2017	2018	2019	2020	2021	2022	2023		2024e	2025e	2026e

EBITDA	0	0	193	270	292	219	177
Net financial items	0	0	-12	-6	-5	-3	-2
Paid tax	-	-	-61	-82	-90	1	-45
Non-cash items	0	0	8	-1	2	0	-78
Cash flow before change in WC	0	0	128	182	199	217	52
Change in working capital	0	0	2	35	-43	-26	74

200	231	255
-7	-5	-4
-55	-48	-54
0	0	0
137	178	196
25	-9	-11

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North Media

Cash Flow (DKKm)	2017	2018	2019	2020	2021	2022	2023	2024e	2025e	2026e
Operating cash flow	-	-	130	217	156	191	126		162	169	186
Capex tangible fixed assets	-	-	-9	-11	-18	-22	-11		-33	-33	-31
Capex intangible fixed assets	-	-	-3	-4	-7	-1	-1		-2	-2	-2
Acquisitions and Disposals	0	0	2	-2	-1	-6	-148		0	0	0
Free cash flow	0	0	120	200	130	163	-33		127	134	152
Dividend paid	-	-	-55	-72	-91	-92	-74		-74	-74	-93
Share issues and buybacks	0	0	-19	-29	7	10	-29		0	0	0
Leasing liability amortisation	-	-	0	0	0	0	0		0	0	0
Other non-cash items	0	197	91	164	117	-191	84		124	49	53
Balance Sheet (DKKm)	2017	2018	2019	2020	2021	2022	2023		2024e	2025e	2026e
Goodwill	-	39	39	39	39	40	146		146	146	146
Other intangible assets	0	14	14	17	10	12	187		183	180	177
Tangible fixed assets	-	322	325	306	290	287	322		298	279	259
Right-of-use asset	-	0	0	0	0	0	0		0	0	0
Total other fixed assets	0	20	10	9	12	30	18		20	21	23
Fixed assets	0	396	389	371	351	369	674		647	626	606
Inventories	-	4	5	4	6	6	6		9	9	8
Receivables	-	99	89	76	75	72	120		171	171	167
Other current assets	-	0	0	0	6	0	0		0	0	0
Cash and liquid assets	-	327	485	739	883	764	813		981	1,082	1,186
Total assets	0	825	968	1,189	1,321	1,211	1,613		1,808	1,888	1,967
Shareholders equity	0	539	671	879	1,080	995	1,156		1,281	1,378	1,481
Minority	-	0	0	0	0	0	0		0	0	0
Total equity	0	539	671	879	1,080	995	1,156		1,281	1,378	1,481
Long-term debt	-	127	123	118	113	109	124		116	107	99
Pension debt	-	0	0	0	0	0	0		0	0	0
Convertible debt	-	0	0	0	0	0	0		0	0	0
Leasing liability	0	0	16	10	7	5	55		55	55	55
Total other long-term liabilities	0	5	10	11	0	0	37		37	37	37
Short-term debt	-	5	5	5	5	5	5		5	5	5
Accounts payable	-	44	35	34	45	31	66		94	94	92
Other current liabilities	0	107	109	132	71	66	169		219	211	198
Total liabilities and equity	0	825	968	1,189	1,321	1,211	1,613		1,808	1,888	1,967
Net IB debt	0	-202	-343	-608	-760	-650	-634		-811	-920	-1,033
Net IB debt excl. pension debt	0	-202	-343	-608	-760	-650	-634		-811	-920	-1,033
Net IB debt excl. leasing	0	-202	-359	-618	-767	-655	-690		-867	-975	-1,088
Capital employed	0	670	814	1,012	1,205	1,114	1,341		1,457	1,546	1,640
Capital invested	0	337	328	271	320	346	522		470	458	448
Working capital	0	-48	-50	-87	-29	-19	-109		-134	-125	-114
EV breakdown	-	-	-	-	-	-	-		-	-	-
Market cap. diluted (m)	0	1,322	1,288	1,274	1,295	1,315	1,315		1,315	1,315	1,315
Net IB debt adj.	0	-202	-343	-608	-760	-650	-634		-811	-920	-1,033
Market value of minority	0	0	0	0	0	0	0		0	0	0
Reversal of shares and	0	-13	-7	-6	-8	-15	-12		-13	-15	-17
participations	-	-	-	-	-	-	-		-	-	-
Reversal of conv. debt assumed
equity	0	1,108	938	659	526	651	669		491	381	266
EV
Total assets turnover (%)	--	0.0	116.6	96.9	82.4	78.6	67.2		78.8	73.2	69.0
Working capital/sales (%)	--	--	-4.7	-6.5	-5.6	-2.4	-6.7		-9.0	-9.6	-9.0
Financial risk and debt service	-	-	-	-	-	-	-		-	-	-
Net debt/equity (%)	--	-37.5	-51.1	-69.2	-70.4	-65.3	-54.9		-63.3	-66.7	-69.7
Net debt / market cap (%)	--	-15.3	-26.6	-48.5	-60.0	-50.5	-49.3		-63.0	-71.5	-80.2
Equity ratio (%)	--	65.3	69.4	73.9	81.8	82.2	71.7		70.9	73.0	75.3
Net IB debt adj. / equity (%)	--	-37.5	-51.1	-69.2	-70.4	-65.3	-54.9		-63.3	-66.7	-69.7
Current ratio	--	2.77	3.89	4.79	8.04	8.26	3.92		3.65	4.08	4.61
EBITDA/net interest	--	--	44.9	54.1	63.5	46.6	33.4		22.1	34.6	40.5
Net IB debt/EBITDA (x)	--	--	-1.8	-2.2	-2.6	-3.0	-3.6		-4.1	-4.0	-4.0
Net IB debt/EBITDA lease adj. (x)	--	--	-1.9	-2.3	-2.6	-3.0	-3.9		-4.3	-4.2	-4.3
Interest coverage	--	--	36.9	47.1	52.0	40.7	28.3		15.0	25.6	31.0
Source: ABG Sundal Collier, Company Data
Share Data (DKKm)	2017	2018	2019	2020	2021	2022	2023	2024e	2025e	2026e

Actual shares outstanding	-	19	19	18	18	19	19
Actual shares outstanding (avg)	0	19	19	18	18	18	19

19	19	19
19	19	19

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North Media

Share Data (DKKm)	2017	2018	2019	2020	2021	2022	2023	2024e	2025e	2026e
All additional shares	-	-	-1	-1	0	0	0	0	0	0
Issue month	-	-	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Assumed dil. of shares from conv.	-	-	0	0	0	0	0	0	0	0
As. dil. of shares from conv. (avg)	-	-	0	0	0	0	0	0	0	0
Conv. debt not assumed as equity	-	-	0	0	0	0	0	0	0	0
No. of warrants	-	-	0	0	0	0	0	0	0	0
Market value per warrant	-	-	0	0	0	0	0	0	0	0
Dilution from warrants	-	-	0	0	0	0	0	0	0	0
Issue factor	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0
Actual dividend per share	-	0.00	4.00	5.00	5.00	4.00	4.00	4.00	5.00	5.00
Reported earnings per share	-	-	11.00	16.90	15.00	0.10	14.30	10.76	9.24	10.55
Source: ABG Sundal Collier, Company Data

Valuation and Ratios (DKKm)	2017	2018	2019	2020	2021	2022	2023	2024e	2025e	2026e
Shares outstanding adj.	0	19	19	18	18	18	19		19	19	19
Diluted shares adj.	0	19	19	18	19	19	19		19	19	19
EPS	-	0.00	11.04	16.66	14.71	0.11	13.99		10.53	9.05	10.32
Dividend per share	-	0.00	4.00	5.00	5.00	4.00	4.00		4.00	5.00	5.00
EPS adj.	-	0.00	5.83	10.10	10.33	15.61	6.20		5.44	7.08	8.23
BVPS	-	0.00	36.09	47.77	58.06	52.95	61.19		67.80	72.94	78.37
BVPS adj.	-	0.00	33.22	44.72	55.41	50.20	43.54		50.36	55.67	61.27
Net IB debt/share	-	0.00	-18.44	-33.05	-40.87	-34.56	-33.56		-42.93	-48.68	-54.65
Share price	69.60	69.60	69.60	69.60	69.60	69.60	69.60		69.60	69.60	69.60
Market cap. (m)	0	1,322	1,288	1,253	1,267	1,288	1,288		1,288	1,288	1,288
Valuation	-	-	-	-	-	-	-		-	-	-
P/E (x)	--	--	6.3	4.2	4.7	623.1	5.0		6.6	7.7	6.7
EV/sales (x)	--	--	0.90	0.63	0.51	0.65	0.70		0.36	0.28	0.20
EV/EBITDA (x)	--	--	4.9	2.4	1.8	3.0	3.8		2.5	1.7	1.0
EV/EBITA (x)	--	--	5.7	2.7	2.2	3.4	4.5		3.6	2.2	1.3
EV/EBIT (x)	--	--	5.5	2.7	2.2	3.4	4.5		3.6	2.2	1.3
Dividend yield (%)	0.0	0.0	5.7	7.2	7.2	5.7	5.7		5.7	7.2	7.2
FCF yield (%)	0.0	0.0	9.3	15.6	10.0	12.4	-2.5		9.7	10.2	11.6
Le. adj. FCF yld. (%)	0.0	0.0	9.3	15.6	10.0	12.4	-2.5		9.7	10.2	11.6
P/BVPS (x)	--	--	1.93	1.46	1.20	1.31	1.14		1.03	0.95	0.89
P/BVPS adj. (x)	69.60	2.65	2.05	1.50	1.22	1.35	1.30		1.15	1.06	0.97
P/E adj. (x)	--	--	11.9	6.9	6.7	4.5	11.2		12.8	9.8	8.5
EV/EBITDA adj. (x)	--	--	4.9	2.4	1.8	3.0	3.8		2.5	1.7	1.0
EV/EBITA adj. (x)	--	--	5.7	2.7	2.2	3.4	4.5		3.6	2.2	1.3
EV/EBIT adj. (x)	--	--	5.7	2.7	2.2	3.4	4.5		3.6	2.2	1.3
EV/CE (x)	--	1.7	1.2	0.7	0.4	0.6	0.5		0.3	0.2	0.2
Investment ratios	-	-	-	-	-	-	-		-	-	-
Capex/sales (%)	--	--	1.2	1.4	2.4	2.3	1.2		2.6	2.6	2.5
Capex/depreciation	--	--	0.4	0.5	0.5	0.8	0.4		0.6	0.6	0.6
Capex tangibles / tangible fixed	--	0.0	2.8	3.5	6.3	7.7	3.4		11.1	11.9	11.9
assets	--	0.0	98.4	51.8	478.6	15.0	4.6		16.0	18.5	20.5
Capex intangibles / definite
intangibles	--	0	55	28	957	69	15		41	43	49
Depreciation on intang / def. intang
Depreciation on tangibles /	--	0.00	7.87	9.26	11.88	8.69	7.54		19.16	18.62	19.47
tangibles

Source: ABG Sundal Collier, Company Data

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North Media

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We, ABGSC Media Research and Mikkel Kousgaard Rasmussen, analyst(s) with ABG Sundal Collier ASA , ABG Sundal Collier Denmark, filial af ABG Sundal Collier ASA, Norge, ABG Sundal Collier AB and/or ABG Sundal Collier Limited (hereinafter collectively referred to as "ABG Sundal Collier"), and the author(s) of this report, certify that not withstanding the existence of any such potential conflicts of interests referred to below, the views expressed in this report accurately reflect my/our personal view about the companies and securities covered in this report. I/We further certify that I/We has/have not been, nor am/are or will be, receiving direct or indirect compensation related to the specific recommendations or views contained in this report.

This report is produced by ABG Sundal Collier, which may cover companies either in accordance with legal requirements designed to promote the independence of investment research ("independent research") or as commissioned research. Commissioned research is paid for by the subject company. As such, commissioned research is deemed to constitute an acceptable minor non-monetary benefit (i.e., not investment research) as defined in MiFID II.

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Production of report: 3/1/2024 06:12.

All prices are as of market close on 29 February, 2024 unless otherwise noted.

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This report has been prepared by ABG Sundal Collier ASA, ABG Sundal Collier Denmark, filial af ABG Sundal Collier ASA, Norge, ABG Sundal Collier AB and/or ABG Sundal Collier Limited and any of their directors, officers, representatives and employees (hereinafter collectively referred to as "ABG Sundal Collier"). This report is not a product of any other affiliated or associated companies of any of the above entities.

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