XXL (Buy, TP: NOK25.00) - Mixed spring, brighter summer
We are c18% below consensus on EBITDA ahead of the Q2 results (due at 07:00 CET on 15 July). We expect a soft start to the quarter, hit by temporarily closed stores due to Covid-19 restrictions, late arrival of bikes, and tough comparables in May and June. Nevertheless, an announcement of a special DPS to restore the targeted leverage ratio would represent a potential catalyst to attract attention to what is an attractive valuation in our view. We reiterate our BUY and NOK25 target price.XXL ASA, formerly known as Megasport AS, is a Norway-based retailer of sporting goods. The Company offers a portfolio of products including clothing, shoes, bicycles, wilderness products, sports equipment, training supplies and equipment, lifestyle and wellbeing products, fishing and hunting equipment, dog toys and accessories, riding clothing and accessories, as well as clothing, equipment and accessories for winter sports. Additionally, it offers services such as bike repair and maintenance, hunting excursion and courses, fishing trips, riding holidays, and dog training. The Company operates via around 40 stores, primarily in Norway but also in Sweden and Finland, and via an e-commerce platform.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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