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Västra Hamnen: Hövding - The pandemic delays growth story

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Västra Hamnen Corporate Finance has released a research update on Hövding following the company's report for Q1 2020. The reported figures show that Hövding was hit by the corona crisis in March and we fear that the effects will linger. The growth path will  likely be delayed and we lower our fair value range for the share to 14.40 - 21.30 SEK per share, writes Västra Hamnen.
 

  • Disappointing sales and gross margin in Q1
  • The company sees tentative signs of improvement in the market
  • We expect lingering effects and cut our outlook and valuation range

We worried that COVID-19 and its ramifications would impact Hövding’s Q1 sales numbers and that worry proved to be justified. In Wednesday’s quarterly report, the company reported a net sales growth of only 7 percent compared with Q1 2019, which means that turnover in the month of March must have nosedived. Both sales and profits in Q1 came in far below our estimates, exacerbated by a surprising drop in gross margin. Not surprisingly, the company said it had abandoned its goal of reaching SEK 250 million in sales this year. Considering the lingering effects of the corona crisis and the likely deep recession ahead of us, we revise our outlook for Hövding and lower our fair value estimate for the share.

The full report is available here.

The research report is prepared as part of Market Focus, Västra Hamnen Corporate Finance's commissioned research offering.

This is a press release from Västra Hamnen Corporate Finance AB. 
Web: vhcorp.se
Twitter: @vhcorp_se