• On the right track after a challenging 2023
• Positive revisions, >10% EBIT margins looks achievable
• We raise our fair value range to reflect estimate revisions

Q1: Net sales +25% y-o-y (Polygiene +70%, Addmaster +3%)

Polygiene reported Q1 net sales of SEK 35.1m (SEK 28m), up 25% y-o-y with a positive FX effect of roughly 2% in the quarter. It was 14% better than ABGSCe as the continued recovery in Addmaster clearly exceeded our expectations. It seems like separating the two brands again was the correct decision and after the re-launch of Addmaster's old website key KPIs have increased significantly. After a challenging few quarters for Addmaster, they are now back to posting y-o-y sales growth again and not too far off peak sales volumes. EBIT was SEK 3.3m (SEK -2.8m), which was better than ABGSCe at SEK -1.5m. The deviation was driven by higher sales volumes and lower other external expenses, suggesting good cost-cutting initiatives by the company.

'24e sales +13% as confidence regarding Addmaster increases

We think the improvement we saw in Q1 is sustainable long-term and that the company can now establish profitability of above 10% EBIT margins again. Polygiene sales, which has a higher share stemming from Asia, was probably negatively affected by the Chinese new year and should be able to improve throughout the year, and Addmaster rebounded strongly, which is the main reason behind our larger upgrades with '24e-'26e sales up 13-11%.

New fair value range of SEK 6-16 (3-11)

The positive revisions are also reflected in a higher fair value range of SEK 6-16 (3-13) as we raise our organic growth assumptions in the forecast period in conjunction with higher assumed profitability. In our three scenario approach we now have long-term EBIT margins ranging from 13% to 22%. On our revised numbers, the stock is trading at a '24 EV/EBIT of 19x.