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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 647 754 806
Sales growth (%) 13,5 16,6 6,9
EBITDA 107 124 154
EBITDA margin (%) 16,6 16,5 19,1
EBIT adj 92 88 110
EBIT adj margin (%) 14,2 11,7 13,7
Pretax profit 74 68 105
EPS rep 2,77 2,43 3,78
EPS growth (%) 37,3 -12,3 55,9
EPS adj 3,31 2,63 3,78
DPS 0,8 0,73 1,13
EV/EBITDA (x) 8,1 6,4 4,7
EV/EBIT adj (x) 9,4 9 6,6
P/E (x) 12,4 11,1 7,1
P/E adj (x) 10,4 10,2 7,1
EV/sales (x) 1,3 1,1 0,9
FCF yield (%) 1,2 -7,7 15,7
Dividend yield (%) 2,3 2,7 4,2
Net IB debt/EBITDA 1,2 1,7 0,9
Lease adj. FCF yield (%) -0,2 -9,7 13,6
Lease adj. ND/EBITDA 0,6 1,4 0,7
SEKm 2021 2022e 2023e
Sales 647 754 806
COGS -288 -323 -358
Gross profit 359 432 449
Other operating items -252 -308 -294
EBITDA 107 124 154
Depreciation and amortisation -38 -52 -56
Of which leasing depreciation -11 -12 -12
EBITA 88 100 128
EO items -12 -5 0
Impairment and PPA amortisation 0 0 0
EBIT 80 84 110
Net financial items -6 -15 -6
Pretax profit 74 68 105
Tax -15 -16 -23
Net profit 59 52 82
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 59 52 82
EPS 2,77 2,43 3,78
EPS Adj 3,31 2,63 3,78
Total extraordinary items after tax -11,6 -4,5 0
Leasing payments -10 -12 -12
Tax rate (%) -20,2 -23,2 -22
Gross margin (%) 55,5 57,2 55,6
EBITDA margin (%) 16,6 16,5 19,1
EBITA margin (%) 13,6 13,3 15,9
EBIT margin (%) 12,4 11,1 13,7
Pretax margin (%) 11,5 9 13
Net margin (%) 9,1 6,9 10,1
Growth rates Y/Y 2021 2022 2023
Sales growth (%) 13,5 16,6 6,9
EBITDA growth (%) 15,7 15,7 24,2
EBIT growth (%) 21,5 4,3 31,9
Net profit growth (%) 23,5 -11,5 55,9
EPS growth (%) 37,3 -12,3 55,9
Profitability 2021 2022 2023
ROE (%) 23,4 15,5 19,7
ROE Adj (%) 28 16,8 19,7
ROCE (%) 19,4 15,7 16,5
ROCE Adj(%) 22,2 16,5 16,5
ROIC (%) 16,8 12,4 14,2
ROIC Adj (%) 19,3 13 14,2
Adj earnings numbers 2021 2022 2023
EBITDA Adj 119 129 154
EBITDA Adj margin (%) 18,4 17 19,1
EBITDA lease Adj 109 117 142
EBITDA lease Adj margin (%) 16,8 15,5 17,6
EBITA Adj 100 105 128
EBITA Adj margin (%) 15,4 13,9 15,9
EBIT Adj 92 88 110
EBIT Adj margin (%) 14,2 11,7 13,7
Pretax profit Adj 86 73 105
Net profit Adj 71 57 82
Net profit to shareholders Adj 71 57 82
Net Adj margin (%) 10,9 7,5 10,1
SEKm 2021 2022e 2023e
EBITDA 107 124 154
Net financial items -6 -15 -6
Paid tax -9 -17 -23
Non-cash items 7 4 0
Cash flow before change in WC 99 96 126
Change in WC -37 22 -6
Operating cash flow 62 118 120
CAPEX tangible fixed assets -19 -18 -24
CAPEX intangible fixed assets 0 -2 -4
Acquisitions and disposals -34 -142 0
Free cash flow 9 -45 91
Dividend paid 0 -18 -16
Share issues and buybacks 0 0 0
Lease liability amortisation -10 -12 -12
Other non cash items -16 -68 -7
Balance Sheet (SEKm) 2021 2022 2023
Goodwill 0 0 0
Other intangible assets 209 373 360
Tangible fixed assets 70 75 86
Right-of-use asset 67 68 68
Total other fixed assets 1 1 1
Fixed assets 348 518 515
Inventories 87 105 112
Receivables 116 140 150
Other current assets 15 18 18
Cash and liquid assets 58 94 158
Total assets 624 876 953
Shareholders equity 293 383 449
Minority 0 0 0
Total equity 293 383 449
Long-term debt 0 82 82
Pension debt 5 6 6
Convertible debt 0 0 0
Leasing liability 67 69 69
Total other long-term liabilities 14 34 34
Short-term debt 116 149 149
Accounts payable 48 58 62
Other current liabilities 80 97 104
Total liabilities and equity 624 876 953
Net IB debt 129 209 146
Net IB debt excl. pension debt 124 204 140
Net IB debt excl. leasing 63 164 100
Capital invested 436 604 606
Working capital 90 109 115
EV breakdown 2021 2022 2023
Market cap. diluted (m) 736 581 581
Net IB debt Adj 130 211 147
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 866 792 729
Capital efficiency (%) 2021 2022 2023
Total assets turnover (%) 113,9 100,6 88,2
Working capital / sales (%) 11,1 13,2 13,9
Financial risk and debt service 2021 2022 2023
Net debt / equity (%) 43,8 54,7 32,5
Net debt / market cap (%) 14 36 25,1
Equity ratio (%) 47,1 43,7 47,1
Net IB debt adj. / equity (%) 44,2 55,1 32,8
Current ratio (%) 107,8 112,8 133,4
EBITDA / net interest (%) 1788,3 805,1 2787,2
Net IB debt / EBITDA (%) 119,8 168,7 94,7
Net IB debt / EBITDA lease Adj (%) 57,7 139,7 70,7
Interest cover (%) 1126,3 458 986,5
SEKm 2021 2022e 2023e
Shares outstanding adj. 21 22 22
Fully diluted shares Adj 21 22 22
EPS 2,77 2,43 3,78
Dividend per share Adj 0,8 0,7 1,1
EPS Adj 3,31 2,63 3,78
BVPS 13,71 17,71 20,76
BVPS Adj 3,95 0,47 4,16
Net IB debt / share 6,1 10,8 7,8
Share price 42,84 26,9 26,9
Market cap. (m) 917 581 581
Valuation 2021 2022 2023
P/E 12,4 11,1 7,1
EV/sales 1,34 1,05 0,9
EV/EBITDA 8,1 6,4 4,7
EV/EBITA 9,8 7,9 5,7
EV/EBIT 10,8 9,5 6,6
Dividend yield (%) 2,3 2,7 4,2
FCF yield (%) 1,2 -7,7 15,7
Lease adj. FCF yield (%) -0,2 -9,7 13,6
P/BVPS 2,51 1,52 1,3
P/BVPS Adj 8,7 57,71 6,47
P/E Adj 10,4 10,2 7,1
EV/EBITDA Adj 7,3 6,2 4,7
EV/EBITA Adj 8,7 7,6 5,7
EV/EBIT Adj 9,4 9 6,6
EV/cap. employed 1,8 1,2 1
Investment ratios 2021 2022 2023
Capex / sales 2,9 2,7 3,5
Capex / depreciation 69,4 49,7 64,5
Capex tangibles / tangible fixed assets 26,9 24,3 28,3
Capex intangibles / definite intangibles 0 0,5 1,1
Depreciation on intangibles / definite intangibles 3,8 4,5 5
Depreciation on tangibles / tangibles 27,5 31,7 30,4

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Main shareholders -

Main shareholders Share capital % Voting shares % Verified
Nordnet Pensionsförsäkring 13.4 % 13.4 % 28 Jun 2022
JCE Group 12.7 % 12.7 % 28 Jun 2022
Acervo AB 6.8 % 6.8 % 28 Jun 2022
Sellers of Artscape Inc 5.2 % 5.2 % 10 Mar 2022
Henrik Nyqvist 4.7 % 4.7 % 12 May 2022
Avanza Pension 4.1 % 4.1 % 28 Jun 2022
Swedbank Robur Fonder 4.0 % 4.0 % 31 Jul 2022
FE Fonder 3.7 % 3.7 % 31 Jul 2022
T-Konsortiet AB 3.5 % 3.5 % 28 Jun 2022
Erik Åfors 3.3 % 3.3 % 28 Jun 2022
Source: Holdings by Modular Finance AB