<a id="bm-comp-f8cebb8e-50e6-42fd-85b7-90acb0ef970f" name="bm-comp-f8cebb8e-50e6-42fd-85b7-90acb0ef970f" class="BMCustomAnchor"></a><table><tr><td bm-component-id="f8cebb8e-50e6-42fd-85b7-90acb0ef970f" style="vertical-align: top; width:100.000000%;"><ul><li>We expect EBITA adj. of SEK 27m in Q1, -15% y-o-y</li><li>We cut '26e EBITA by 3%</li><li>We reiterate our fair value range of SEK 36-43</li></ul></td></tr></table><a id="bm-comp-9a578231-8d24-426b-8b42-6f9feb4b97b0" name="bm-comp-9a578231-8d24-426b-8b42-6f9feb4b97b0" class="BMCustomAnchor"></a><table><tr><td bm-component-id="9a578231-8d24-426b-8b42-6f9feb4b97b0" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">We expect EBITA adj. growth of -15% in Q1'26e</h3><p>Embellence Group's net sales development keeps being dictated by previous comparable growth, in our view. While Group comps appear to be markedly easier than Q4 in Q1, we forecast muted growth, as Artscape comparables are affected by a large order in Q1'24. We expect stronger performance for segments with larger Swedish exposure (Boråstapeter, Pappelina, External manufacturing), while we expect the soft UK market to weigh on Cole & Son. All in all, we expect organic growth of 3.5% in Q1'26e for net sales of SEK 199m. We expect a flat gross margin y-o-y, as we expect positive volume effects in the factory to be offset by a higher share of Artscape in the sales mix. Initiatives to drive the DTC move, upgrade websites and having both a CEO and a CFO in Q1'26 (vs. a CFO also acting as CEO in Q1'25) mean that we expect a 1.4pp higher SG&A ratio for SEK 27m EBITA adj., -15% y-o-y.</p><h3 class="bm-h3">We cut our '26e EBITA by 3%</h3><p>We lower our 2026 organic growth estimates by 70bp in this note, seeing e.g. softer CPA forecasts for renovation in the UK. We also raise our SG&A estimates to better reflect costs related to the ongoing move to DTC, which means we cut our EBITA adj. margin forecasts by 60-30bp for '26e-'28e. Offsetting these downward revisions are positive FX effects, which boost EBITA by 2-3%. In total, we cut our '26e EBITA by 3% and leave '27e-'28e unchanged. Our forecasts reflect an 8% EBITA CAGR '25-'28e.</p><h3 class="bm-h3">We reiterate our fair value range of SEK 36-43</h3><p>The Embellence share is trading at 7.4x-6.1x our '26e-'27e EBITA after returning -14% YTD. As we make only minimal adjustments to our forecasts, we reiterate our fair value range of SEK 36-43, which corresponds to 7.6x-9x '26e EBITA. At the current share price, the implied annual FCF yield after leasing costs is 9-13% for '26e-'28e.</p></td></tr></table>