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Embellence Group

Embellence Group

Embellence Group is a Swedish house of brands focused on premium wallpaper that is successively expanding into adjacent product categories (textiles, rugs, window film). It holds leading positions in the Swedish and Norwegian markets, and top-three positions in Italy and the UK. Embellence has over 100 years of history and today consists of the six brands Artscape Inc., Boråstapeter, Cole & Son, Wall & Decó, Pappelina and Perswall. The group aims to broaden its geographical footprint and grow both organically and through acquisitions, with a focus on the premium segment.

Operating in a highly fragmented market and having limited market share in continental Europe, we see significant opportunities for Embellence to become a consolidator, foremost within premium wallpaper and home interior. Furthermore, we see great potential for Embellence to successfully capitalise on its extensive pattern archive to expand further into adjacent product categories.

Embellence uses a variety of raw materials in its production, making it subject to potential cost inflation that could hamper margins and earnings. Other risks include production-related risks, but we view this risk as fairly low given that the majority of its production is in-house. Embellence also has exchange rate exposure, primarily to GBP, EUR, NOK and USD, which could have a significant impact if large fluctuations occur.

SEKm 2021 2022e 2023e
Sales 647 779 830
Sales growth (%) 13,5 20,4 6,5
EBITDA 107 155 165
EBITDA margin (%) 16,6 19,9 19,9
EBIT adj 92 121 128
EBIT adj margin (%) 14,2 15,5 15,4
Pretax profit 86 116 122
EPS rep 3,31 4 4,21
EPS growth (%) 122,5 21,1 5,1
EPS adj 3,31 4 4,21
DPS 0,8 1,17 1,26
EV/EBITDA (x) 8,1 6,1 5,3
EV/EBIT adj (x) 9,4 7,8 6,8
P/E (x) 10,4 8,2 7,8
P/E adj (x) 10,4 8,2 7,8
EV/sales (x) 1,3 1,2 1,1
FCF yield (%) 1,2 -9,6 13,2
Dividend yield (%) 2,3 3,6 3,9
Net IB debt/EBITDA 1,2 1,3 0,8
Lease adj. FCF yield (%) -0,2 -10,8 12
Lease adj. ND/EBITDA 0,6 1 0,5
SEKm 2021 2022e 2023e
Sales 647 779 830
COGS -288 -336 -368
Gross profit 359 443 461
Other operating items -252 -289 -296
EBITDA 107 155 165
Depreciation and amortisation -38 -45 -46
Of which leasing depreciation -11 -9 -9
EBITA 100 135 142
EO items 0 0 0
Impairment and PPA amortisation 0 0 0
EBIT 92 121 128
Net financial items -6 -5 -6
Pretax profit 86 116 122
Tax -15 -25 -27
Net profit 71 90 95
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 71 90 95
EPS 3,31 4 4,21
EPS Adj 3,31 4 4,21
Total extraordinary items after tax 0 0 0
Leasing payments -10 -9 -9
Tax rate (%) -17,5 -21,8 -22
Gross margin (%) 55,5 56,9 55,6
EBITDA margin (%) 16,6 19,9 19,9
EBITA margin (%) 15,4 17,4 17,2
EBIT margin (%) 14,2 15,5 15,4
Pretax margin (%) 13,3 14,9 14,7
Net margin (%) 10,9 11,6 11,5
Growth rates Y/Y 2021 2022 2023
Sales growth (%) 13,5 20,4 6,5
EBITDA growth (%) 15,7 44,1 7
EBIT growth (%) 67,8 31,3 6
Net profit growth (%) 93,2 27,8 5,1
EPS growth (%) 122,5 21,1 5,1
Profitability 2021 2022 2023
ROE (%) 28 26,4 22,3
ROE Adj (%) 28 26,4 22,3
ROCE (%) 22,2 21,8 18,6
ROCE Adj(%) 22,2 21,8 18,6
ROIC (%) 19,9 18 16,3
ROIC Adj (%) 19,9 18 16,3
Adj earnings numbers 2021 2022 2023
EBITDA Adj 107 155 165
EBITDA Adj margin (%) 16,6 19,9 19,9
EBITDA lease Adj 97 146 157
EBITDA lease Adj margin (%) 15 18,7 18,9
EBITA Adj 100 135 142
EBITA Adj margin (%) 15,4 17,4 17,2
EBIT Adj 92 121 128
EBIT Adj margin (%) 14,2 15,5 15,4
Pretax profit Adj 86 116 122
Net profit Adj 71 90 95
Net profit to shareholders Adj 71 90 95
Net Adj margin (%) 10,9 11,6 11,5
SEKm 2021 2022e 2023e
EBITDA 107 155 165
Net financial items -6 -5 -6
Paid tax -9 -25 -27
Non-cash items 7 -7 0
Cash flow before change in WC 99 118 133
Change in WC -37 -23 -6
Operating cash flow 62 95 127
CAPEX tangible fixed assets -19 -21 -25
CAPEX intangible fixed assets 0 -3 -4
Acquisitions and disposals -34 -142 0
Free cash flow 9 -71 98
Dividend paid 0 -17 -27
Share issues and buybacks 0 0 0
Lease liability amortisation -10 -9 -9
Other non cash items -16 -2 0
Balance Sheet (SEKm) 2021 2022 2023
Goodwill 0 0 0
Other intangible assets 209 355 345
Tangible fixed assets 70 78 89
Right-of-use asset 67 64 57
Total other fixed assets 1 1 1
Fixed assets 348 499 492
Inventories 87 111 119
Receivables 116 148 158
Other current assets 15 17 17
Cash and liquid assets 58 108 170
Total assets 624 883 955
Shareholders equity 293 392 460
Minority 0 0 0
Total equity 293 392 460
Long-term debt 0 118 119
Pension debt 5 6 6
Convertible debt 0 0 0
Leasing liability 67 64 55
Total other long-term liabilities 14 14 14
Short-term debt 116 126 126
Accounts payable 48 61 65
Other current liabilities 80 103 109
Total liabilities and equity 624 883 955
Net IB debt 129 204 135
Net IB debt excl. pension debt 124 199 129
Net IB debt excl. leasing 63 142 81
Capital invested 436 610 609
Working capital 90 113 118
EV breakdown 2021 2022 2023
Market cap. diluted (m) 736 738 738
Net IB debt Adj 130 206 136
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 866 944 874
Capital efficiency (%) 2021 2022 2023
Total assets turnover (%) 113,9 103,4 90,3
Working capital / sales (%) 11,1 13 13,9
Financial risk and debt service 2021 2022 2023
Net debt / equity (%) 43,8 52,1 29,2
Net debt / market cap (%) 14 27,7 18,2
Equity ratio (%) 47,1 44,4 48,2
Net IB debt adj. / equity (%) 44,2 52,5 29,5
Current ratio (%) 107,8 126,3 147,1
EBITDA / net interest (%) 1788,3 3189,1 2812
Net IB debt / EBITDA (%) 119,8 132,1 81,4
Net IB debt / EBITDA lease Adj (%) 64,6 97,3 51,8
Interest cover (%) 1271,3 1055,9 1030,5
SEKm 2021 2022e 2023e
Shares outstanding adj. 21 23 23
Fully diluted shares Adj 21 23 23
EPS 3,31 4 4,21
Dividend per share Adj 0,8 1,2 1,3
EPS Adj 3,31 4 4,21
BVPS 13,71 17,35 20,39
BVPS Adj 3,95 1,66 5,16
Net IB debt / share 6,1 9,1 6
Share price 42,84 32,7 32,7
Market cap. (m) 917 738 738
Valuation 2021 2022 2023
P/E 10,4 8,2 7,8
EV/sales 1,34 1,21 1,05
EV/EBITDA 8,1 6,1 5,3
EV/EBITA 8,7 7 6,1
EV/EBIT 9,4 7,8 6,8
Dividend yield (%) 2,3 3,6 3,9
FCF yield (%) 1,2 -9,6 13,2
Lease adj. FCF yield (%) -0,2 -10,8 12
P/BVPS 2,51 1,88 1,6
P/BVPS Adj 8,7 19,72 6,33
P/E Adj 10,4 8,2 7,8
EV/EBITDA Adj 8,1 6,1 5,3
EV/EBITA Adj 8,7 7 6,1
EV/EBIT Adj 9,4 7,8 6,8
EV/cap. employed 1,8 1,3 1,1
Investment ratios 2021 2022 2023
Capex / sales 2,9 3,1 3,5
Capex / depreciation 69,4 65,8 77,2
Capex tangibles / tangible fixed assets 26,9 26,7 28
Capex intangibles / definite intangibles 0 0,8 1,2
Depreciation on intangibles / definite intangibles 3,8 4,2 4,3
Depreciation on tangibles / tangibles 27,5 27,4 25,8

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Main shareholders -

Main shareholders Share capital % Voting shares % Verified
Nordnet Pensionsförsäkring 13.4 % 13.4 % 31 Mar 2022
Litorina 12.9 % 12.9 % 31 Mar 2022
JCE Group 11.1 % 11.1 % 31 Mar 2022
Acervo AB 6.8 % 6.8 % 31 Mar 2022
Sellers of Artscape Inc 5.2 % 5.2 % 10 Mar 2022
Henrik Nyqvist 4.7 % 4.7 % 12 May 2022
Swedbank Robur Fonder 4.0 % 4.0 % 30 Apr 2022
FE Fonder 3.7 % 3.7 % 30 Apr 2022
T-Konsortiet AB 3.5 % 3.5 % 31 Mar 2022
Avanza Pension 3.3 % 3.3 % 31 Mar 2022
Source: Holdings by Modular Finance AB