HomeMaid initiation of coverage: A well-swept business with a polished price tag

We initiate coverage on HomeMaid with a Reduce recommendation and a target price of SEK 29. We believe HomeMaid holds a strategically attractive position in the steadily growing and resilient Swedish cleaning and services market. The company has a long history of successfully combining organic growth with a disciplined M&A strategy, capitalizing on the industry’s fragmented landscape by acquiring smaller players at attractive valuations. The company has also distributed generous dividends over the past years, a trend we expect to continue given its good cash flow generation and low capital intensity. However, valuation remains the key constraint in our view, and we maintain a watchful stance for a more attractive entry.

Stable revenues and asset-light model support strong cash flow

HomeMaid is Sweden’s second-largest home cleaning provider, with B2C accounting for approximately two-thirds of the Group’s revenue. Around 80% of the Group’s revenue is subscription-based, providing stable, recurring revenue streams. HomeMaid operates with a highly labor-intensive cost structure, making operational efficiency and utilization optimization essential for maintaining the relatively thin margins typical of the industry. However, the business model is asset-light with modest working capital requirements, allowing for strong cash flow generation that closely mirrors operating profit over time.

A fragmented industry where trust and quality are crucial

As one of the largest providers, HomeMaid benefits from scale-driven advantages such as stronger brand recognition, credibility, and operational resources. We believe these are important differentiators in a highly fragmented market dominated by smaller players. Despite its size, HomeMaid maintains a strong local presence, high-touch onboarding (e.g., home visits), and a focus on workforce quality, factors we believe provide a modest competitive edge. That said, we feel strong long-term sustainable competitive advantages are difficult to achieve in this industry. Since the RUT tax deduction was introduced in 2007, the industry has experienced significant growth. Over the past decade, the market has grown at a 10% CAGR, far outpacing Sweden’s GDP (~2%), driven by rising adoption, new entrants, and supportive policies. The market is also low-cyclical, having contracted only once post-RUT reform. However, policy risk, labor shortages, and price pressure remain key headwinds to continued growth.

2025 will be strong and long-term outlook remains solid

The RUT market has started strongly in 2025 and is on track for a record year. Given HomeMaid’s close correlation to the market, we project 11% revenue growth in 2025. Recent years’ operational efficiencies have supported margin improvements, and we expect this, combined with estimated revenue growth, to improve the EBITA margin from 8.0% in 2024 to 9.4% in 2025. Beyond 2025, we expect growth to normalize at 5-6%, reflecting the RUT market’s structural stability and rising consumer adoption. While we believe long-term margin pressure is likely due to fragmentation and limited pricing power, HomeMaid’s scale and maturity should support margins somewhat above the industry average over time.

On the lookout for a more attractive risk/reward

Over the past year, HomeMaid’s stock has appreciated significantly (+120%), which we believe reflects a combination of the company’s accelerated growth and improved profitability. Based on our 2025-2026e estimates, HomeMaid is trading at forward adjusted EV/EBITA and P/E multiples of 13-12x and 17-16x, respectively, which we believe to be on the high side. With earnings growth somewhat compensating for expected multiple contraction, we assess the expected return leans on the 4-5 % dividend yield and looks insufficient. While we believe structural drivers such as increased interest and adoption of RUT-related services will continue to support the company’s growth trajectory over several years, while maintaining rather stable margins, we are on the lookout for a more attractive risk/reward.