* Overall solid report; focus turning to capital allocation * We cut '26e-'27e adj. EBITA by 3-2%, 7% CAGR '25-'28e * Share trades at 12x EBITA and 8% FCF yield on 2026e
ANNONS
Incremental progress towards the 5.5% margin target
We think Coor delivered a solid Q4. Margins were somewhat disappointing due to Denmark, which also explains why we cut '26e-'27e adj. EBITA by 3-2%. We conclude that the margin recovery continues after successful streamlining initiatives in 2025. For the full year 2025, margins reached 4.8% (4.4% 2024), and we now expect 5.3% in 2026 (down from 5.4% and slightly below the target of 5.5%). On top of the completed streamlining initiatives targeting overhead operations that should give full effect from '26e, we understand that management is still in the early stages of designing and implementing new systems to harmonise day-to-day operations on a more local level through better data collection and reporting. This is an area where the new management team brings important expertise. We therefore remain confident in the 5.5% target and believe Coor will reach it by '28e.
Balance sheet allows for higher payout ratio
After weak FCF in '23 and '24, the conversion from EBITA was back to a solid 63% in '25 (avg. '15-'23 of ~70%) and we expect >65% for '26e-'28e. This means that we expect Coor to deliver a 7% capital repatriation yield in '26 (4% dividend 3% buybacks) while simultaneously lowering gearing to 2.3x (2.6x). From this level, we think it could combine a high payout and make bolt-on acquisitions (management says it remains active on M&A). For now, we think buybacks are more likely while it focuses on operational efficiencies, but M&A could be relevant from H2'26e and '27e.
Fair value range narrowed to SEK 40-80 per share (35-80)
Following our estimate revisions, the share is trading at 12x EBITA on '26e (8% FCF yield), fairly in line with Nordic service peers at 11x. Given the strong cash flow recovery in '25, we narrow our fair value range to SEK 40-80 per share (35-80).
