Tokmanni - Towards new milestones

Tokmanni’s Q4 result outpaced the expectations. The company was also able to reach its adj. EBIT margin target of 9% and sales target of EUR 1bn in 2020. New strategic targets are introduced in March. We keep our rating “BUY” with TP of EUR 20 (18.4).

Result outpaced the expectations
Tokmanni reported extremely strong Q4 figures. Revenue increased by 14.6% y/y to EUR 327m (vs. 315m Evli & cons.). LFL growth was 13.4% y/y. Sales development was at good level in all product categories. Online sales grew by 134% y/y and accounted for 1.4% of total revenue. Adj. gross profit amounted EUR 120m (36.8% margin) vs. EUR 110m Evli & consensus. Adj. EBIT totaled EUR 45m (38m/37m Evli/cons.). Dividend proposal was also clearly above expectations as it was EUR 0.85 per share vs. EUR 0.78 our view and EUR 0.74 consensus.

Financial targets met – new ones to come
Tokmanni’s target was to reach adj. EBIT margin of 9% which was exceeded last year. The company also exceeded sales of EUR 1bn. Tokmanni will introduce its revised strategic targets in connection with the CMD which takes place in March. We see that there is still gross margin improvement potential as the company aims constantly to increase the share of direct import and private labels. This boosts profitability development. We expect further growth in online sales, though the share is still expected to remain relatively low compared to the total sales (online sales grew by 124% in 2020). The company’s low price image combined with broad product assortment has paid off and the company has been able attract new customers. The share of new customers was 20% in 2020. Tokmanni has also launched a review on the possibilities of expanding the logistics center in Mäntsälä and we hope to get more color on that later during the year.

“BUY” with TP of EUR 20 (18.4)
Tokmanni expects slight growth in revenue in 2021. Adj. EBIT is expected to be at the same level as in the previous year. We have increased our 21E sales expectation by ~4% and expect sales of EUR 1089m (+1.5% y/y). We expect adj. EBIT of EUR 99m (9.1% margin). On our estimates the company trades with 21E-22E EV/EBIT multiple of 13.7x and 12.8x which is 7-8% discount compared to the Nordic non-grocery peers. We keep our rating “BUY” with TP of EUR 20 (18.4).

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