* Better organic growth, Finland surprised positively * Most important segment, Sweden, is performing well * Growth trend to drive margin recovery and substantial EPS growth
Q1 results
Alligo delivered a solid Q1 report, with the harsh winter weather driving increased organic growth as expected, and even managing to beat our expectation of 3% with its 5%. The majority of this beat was, to our surprise, driven by Finland, which managed to more than offset the volumes lost from the two ended customer relationships with increased volumes to other customers. The margin also showed a positive trend as adj. EBITA increased to 4.8% (3.3%) of sales on the group level. The gross margin was flat y-o-y, as higher sales of own brands and favourable FX were offset by a higher share of sales from non-integrated businesses.
Estimate changes
The company mentioned that it has seen positive signs in the market during the quarter, but that it is still waiting for a definitive upturn. The solid growth in Sweden and surprisingly positive result in Finland despite the ongoing restructuring prompt us to raise '26e/'27e/'28e adj. EBITA by 6%/1%/3%.
Outlook and valuation
The most important segment, Sweden, is performing well and should continue to benefit from favourable GDP forecasts for Sweden. In Norway, oil and gas has been slow for a few quarters, but this might benefit from the recent price surges. The Finland restructuring is progressing more rapidly than anticipated. All in all, the trend continues to be positive, and the organic growth we see should enable further margin recovery, resulting in substantial organic earnings growth over the coming years, around 25% this year and 15% in both '27e and '28e on the adj. EPS level. The share is now trading at 14x-11x '26e-'28e P/E, vs. its historical median of 14x-9x and peers at 27x-14x.