* We expect near-term headwinds: Q1 EBITA -8% y-o-y * Soft UK forecasts mean we lower '26e-'28e EBITA by 4-1% * We lower our fair value range to SEK 55-75, 10x-13x '26e EV/EBITA
Higher shipping rates and ROT hangover could weigh on Q1
Seeing soft macro signals from the UK and Sweden, Svedbergs Group's two largest markets, and also tougher comparable growth figures sequentially, we expect a deceleration in organic growth of 4% in Q1, for net sales of SEK 580m. We expect freight-related gross margin pressure in Roper Rhodes to partly offset pricing initiatives, for a 30bp gross margin expansion, but higher opex related to selling initiatives will weigh on margins, for an EBITA margin contraction of 80bp to 14.9% and EBITA of SEK 86m, -8% y-o-y.
Soft signals from the UK lead to 4% lower '26e EBITA
We cut our group '26e-'28e EBITA estimates by 4-1%, lowering our EBITA forecasts for the Svedbergs and Roper Rhodes segments. We cut our Svedbergs estimates near-term on a soft ROT backdrop, as we assess that a disproportionate number of bathroom projects were done before the new year to benefit from the then-higher tax deductions. We cut our Roper Rhodes figures as well on the back of soft CPA forecasts and higher freight rates, which we believe could have a negative impact on Roper Rhodes' gross margins, in particular given the business model with production in China. Updated FX rates offset some of our estimate cuts, however.
We lower our fair value range to SEK 55-75 (57-77)
The Svedbergs share has returned 2% YTD, and is now trading at 12.1x '26e EV/EBITA. We lower our fair value range to SEK 55-75 (57-77) in this note, which corresponds to '26e EV/EBITA of 10x-13x. We argue the most relevant peers to Svedbergs Group are Nordic home improvement companies, which are trading at an average 11.6x '26e EV/EBITA.