Relais: Growth leap into Central Europe

Translation: Original published in Finnish on 4/8/2025 at 8:00 am EET.

Expansion into Central Europe through acquisition is a strategic first step for Relais, supporting its growth and market potential. In our opinion, the conditions for value creation are good, given the quality of the target and the reasonable purchase price. We have slightly revised our organic forecasts for H1 to take into account the mild winter, while we will include the acquisition in our forecasts once the timing of the completion is confirmed. Against this backdrop, we reiterate our EUR 16.5 target price and Buy recommendation.

Growth leap into the accessories market in Central Europe

Relais announced yesterday the acquisition of the Matro Group, which will expand the company's activities in the truck accessories market in Central Europe. Matro Group is a long-established distributor of accessories in the Benelux and Germany, among other countries, and is also a long-term customer of Strands, a subsidiary of Relais. We understand that Matro Group's most important accessories brand is Nedking, which is present in Central Europe but not in the Nordic countries. This will provide growth opportunities for Relais' existing Nordic operations, while Strands' experience in brand building will support the conditions for Matro Group's further growth in Europe.

Purchase price is rather reasonable

In the last two years, the revenue of the target was 18.1 and 18.7 MEUR, while the EBIT in the corresponding years was 3.6 MEUR. As a result, Matro Group's profitability has been excellent, at around 20%. Relais will acquire 70% of Matro Group at this point for approximately 19.9 MEUR and the net debt-free enterprise value of the target in the transaction will be 27.9 MEUR. Thus, based on the previous two years' results, the purchase price corresponds to an EV/EBIT multiple of around 8x, which is moderate given the quality of the business and, in our view, a rather good return on capital. Relais will finance around 15 MEUR of the purchase price from its cash at hand, which is well within its means considering its cash position and the recently confirmed financing package. The remainder of the purchase price will be financed with a vendor note. The parties to the transaction have agreed on a shareholder agreement that includes a put and call option for the remaining 30%.

Minor organic forecast revisions

We have made very marginal changes of 1-3% to our estimates. We have slightly lowered our short-term organic growth forecasts, reflecting the mild winter at the beginning of the year. As a result, we forecast an organic decline in revenue for Technical Wholesale and Products compared to the exceptionally strong comparison period driven by weather conditions. As for the acquisition, we will include it in our forecasts closer to its expected confirmation in the summer, but we are taking into account a small non-recurring cost of the acquisition.

Valuation is attractive on multiple measures

According to our forecasts, the P/E ratios adjusted for goodwill amortization for 2025-2026 are around 10x and the EV/EBITA ratios are 10-9x. In our view, the absolute valuation multiples for the coming years are favorable. Following the recent share price decline, Relais is valued at a significant discount to its industry peers, which we do not believe is justified. Thus, the valuation gap relative to the peer group of serial consolidators is also significant, and in addition, the current share price is significantly below the value indicated by our DCF model, which is EUR 16.5 per share. We believe the company has the potential to achieve sustained value creation over time with its acquisition-driven strategy, and we consider the current share price to be attractive relative to this.