* '25e-'27e sales down 1-3%
* Aurdel comps keep getting easier
* '26e EV/sales of just below 0.5x at 1% EBIT margin
Q2 report mirrored historical problems
Q2 was a bit softer than expected with regards to Aurdel, while Septon carried a more positive impact than we had anticipated. Aurdel's issues are largely related to DistIT's historical arrangements with bondholders. These arrangements ultimately resulted in Aurdel being unable to invest in better inventory because it was instead obligated to repurchase bonds. The result of this has been a five-year-long negative growth streak in Aurdel.
'25e-'27e sales down 1-3% on Aurdel softness
We cut '25e-'27e sales by 1-3% and '26e-'27e EBIT by 2-13% on the back of the report. We do not over-extrapolate the weakness in Aurdel because it's most likely tied to a historical problem that we believe will be remedied when DistIT's recapitalisation efforts are complete. In Q3 and Q4 this year, Aurdel will be able to buy more attractive inventory that will allow it to grow profitably from late '25. As a pure-play distributor, EFUEL doesn't have inventory-related problems to the same degree as Aurdel, and it should therefore be able to grow to earn some SEK 20-25m annually over time. We assess that the earnings power (potential EBIT) in a few years, and with adequate capitalisation, should be ~SEK 65-70m annually. Assuming a relatively low debt load going forward, this should be able to generate distributable cash flow to shareholders.
Implied valuation
Based on our revised estimates, the company is trading at a '26e EV/sales of just below 0.5x given a 1% EBIT margin. This is approximately in line with the average EV/sales at which Dustin has traded in the last three years, despite DistIT's achievable margin being at least 2x higher than that of Dustin.
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