Q3 confirms that Gabriel's continuing textile business is delivering margin progression in a market that has yet to turn. Revenue landed marginally below our estimate, but the gross margin reached the highest level of the year and EBIT, PTP and EPS all came in above our estimates. Management narrowed full-year guidance to revenue of MDKK 528-532 and EBIT of MDKK 44-46, and we trim our estimates while staying at the top of the guided revenue range. More significantly, the completed European sale at an equity value of MDKK 76.9 came in well above our previous assumption, which we view positively as it removes uncertainty and strengthens the group's capital structure. Our DCF points to DKK 278 and we retain a target price of DKK 270, but with the share price at DKK 238 we upgrade our recommendation to "Accumulate" from "Reduce".

Margins beat while the top line stays subdued 

Q3 revenue of MDKK 133.0 (+3.4% y/y) came in a touch below our MDKK 134 estimate, with growth in Europe and North America while Asia landed flat. The gross margin of 56.3% was the strongest of the year, lifting EBIT to MDKK 11.9 at a 9.0% margin (Q3 2024/25: 8.4%), achieved while staff costs rose 8.7% y/y as the build-out of key account managers continued. Net financing improved to an expense of MDKK 1.4 from MDKK 7.2, taking PTP to MDKK 11.5 and EPS to DKK 4.40, both ahead of our estimates.

Guidance narrowed on volume, not on deterioration 

Guidance was narrowed to revenue of MDKK 528-532 (originally 510-550) and EBIT of MDKK 44-46 (originally 40-55), lowering the EBIT midpoint to MDKK 45 from MDKK 47.5. Management is explicit that nothing has deteriorated since May, with the lower midpoint reflecting the volume effect of landing near MDKK 530 rather than the MDKK 550 top end. We trim 2026e EBIT 5% to MDKK 45.7 and revenue 1% to MDKK 532. The margin trajectory towards a peak of 11.5% is unchanged.

Disclosed proceeds correct our conservative assumption 

In July we assumed net proceeds of MDKK 30, as we expected the liabilities assumed by the buyer to account for most of the enterprise value. Gabriel now discloses an equity value of MDKK 76.9 against an enterprise value of MDKK 67.3, the difference reflecting net cash in the divested entities rather than the debt deduction we had expected. Revising the 30 June balance sheet accordingly, and assuming the unsold Mexican unit is disposed of debt-free with no cash consideration, the write-down against equity falls to MDKK 19.9 from the MDKK 114 in our previous model. Management has indicated the proceeds will be applied to further debt reduction.

We retain the target price at DKK 270 and upgrade to Accumulate

Our DCF model suggests a value of DKK 278 per share, as the improved carve-out terms more  than offset the reduction to our estimates. We retain a target price of DKK 270, held below the model value while we await the final closing statements for the European transaction and the new guidance for 2026/27for the continuing business. Since our July note the shares have fallen to DKK 238, while the completed European sale has removed uncertainty and confirmed cash proceeds above our assumption. The expected return to our target price now exceeds our 8.8% cost of capital, and we therefore upgrade our recommendation to "Accumulate" from "Reduce".

Disclaimer: HC Andersen Capital receives payment from Gabriel for a DigitalIR and research agreement. /Rasmus Køjborg and Victor Skriver 08:30 02/09/2026.