Tokmanni - Strong tailwind expected to continue

Expecting sales growth of ~10%

Despite the weakened COVID-19 situation and new regional restrictions, we expect Tokmanni to reach strong figures in Q4E, driven by campaigns and Christmas sales as well as new store openings. We have increased our Q4’20E sales expectation by ~5% and our adj. EBIT expectation by ~10%. We expect Oct-Dec sales to grow by 10.4% y/y to EUR 314.5m and adj. EBIT of EUR 38m (margin of 12.1%). We expect 20E dividend of EUR 0.78 per share.

The final quarter is driven by campaigns and Christmas

The household consumption has been focused on domestic purchases during the pandemic which has benefited Tokmanni throughout the year. Even though the virus situation weakened towards the end of the year and fears of the new virus variants rose we expect only limited impacts on customer flows. As consumers have continued to spend more time at home, we expect the demand of e.g. leisure, sport, and home products has been strong. The company’s increasing online presence should also boost sales during campaigns such as Black Friday. We don’t expect similar discount sales as seen in Q3 with apparel sales which should support gross margin.

“BUY” with TP of EUR 18.4 intact

We expect FY20E sales of EUR 1061m (12.4% y/y) and adj. EBIT of EUR 92.9m. We haven’t made significant changes to our 21E-22E estimates. On our estimates, the company trades with 20E-21E EV/EBIT multiple of 14.4x and 14.3x, which is similar compared to the Nordic non-grocery peers and ~20% discount compared to the int. discount peers. We keep our rating “BUY” with TP of EUR 18.4 intact ahead the Q4 result.