Swedish Match (No_rec, TP: SEK) - Discontinuing coverage

We have discontinued coverage of Swedish Match. Our last published recommendation, target price and estimates should no longer be relied upon.

Northern Lights

Swedish Match - ZYN saved the day

Margin pressure in Scandinavia Strong volumes and good margins from ZYN in the US PMI could lower acceptance level from current 90%

Swedish Match Minor model adjustments

We have updated our estimates, owing to Swedish Match Q3 results from this morning. We do not consider these changes to be material, and we have not changed our HOLD recommendation. We reiterate our SEK116 target price.

Swedish Match - Slightly softer results but US stays strong

EBIT -1% y-o-y (lccy) to SEK 2.4bn (-3% vs. consensus) ZYN volumes grew 13% q-o-q, above our expectations Consensus ‘22e EBIT seen down 1-2%

Northern Lights

Swedish Match (Hold, TP: SEK116.00) - Expecting another solid top line

We expect another solid top line from Swedish Match in Q3, with still-strong momentum in the US smoke-free business. However, we also see margin pressure from the ongoing channel shift in the Nordics and higher marketing spend in the US. That said, we expect the revised PMI bid to overshadow the Q3 report. We reiterate our HOLD, but have raised our target price to SEK116 (106) to reflect PMI’s increased bid.

Swedish Match - Raised bid ahead of strong Q3e numbers

We forecast Q3’22e EBIT of SEK 2.5bn (+19% y-o-y) ZYN expected to have shipped 62m cans (+34% y-o-y) TP raised to SEK 116 on the back of PMI’s raised bid

Swedish Match - ZYN continues to shine

ZYN grew volumes by close to 40% y-o-y Strong USD/SEK rate drives >20% EPS growth in H2’22e We raise ‘23e-‘24e EPS by 1%, driven by ZYN

Swedish Match (Hold, TP: SEK106.00) - Continued Zyn momentum in Q2

With the offer period for PMI’s bid still open, the Q2 results were less relevant – although the c5% top-line beat illustrated still-strong Zyn momentum, which arguably could fuel deal resisters. However, we still find it difficult to assess how the big shareholders will ultimately respond once the offer period ends. We therefore reiterate our HOLD and SEK106 target price, which is in line with PMI’s current offer.

Swedish Match - Solid Q2 results but a mixed bag

EBIT of SEK 2.3bn was 1% above consensus Smokefree strong but weaker in Cigars and Lights We expect cons. EBIT to come up 1-2%

Swedish Match Minor model adjustments

We have updated our estimates, mainly owing to FX tailwinds. We do not consider these changes to be material, and we have not changed our HOLD recommendation. We reiterate our SEK106 target price.

Swedish Match - We expect a strong set of Q2’22 numbers

We estimate EBIT of SEK 2,182m (+12% y-o-y) ZYN volumes set to grow 27% y-o-y Elliott rumoured to be building a stake, reiterate HOLD

Northern Lights

Swedish Match (Hold, TP: SEK106.00) - A suitable Match

Shortly before yesterday’s Q1 results, Phillip Morris announced a SEK106/share offer for Swedish Match. This news in our view overshadowed a quarter that, apart from confirming the Zyn growth story, was rather uneventful. We recognise the logic behind the approach by Phillip Morris and see no obvious alternative suitor that could drive the price higher, unless there is a potential LBO. We have raised our target price to SEK106 (87) in line with the offer by Phillip Morris, but downgraded to HOLD...

Swedish Match - A fair bid: we advise owners to accept

Strong sales growth but weak margins in Scandinavia ZYN margins contracted slightly q-o-q Considering valuation and risks, the SEK 106 bid seems fair

Swedish Match - Q1 results at first glance

Adj. EBIT of SEK 2,024m (-3% vs consensus) The US smokefree margin 70bps ahead of ABGSC est. We expect insignificant revisions to consensus estimates

Swedish Match - In talks with Philip Morris

Potential deal value above USD 15bn (~30% premium) Implying SEK 98.5 per share (18.8x EV/EBIT ‘22e) Accept any bid above SEK 98.5

Northern Lights

Swedish Match (Buy, TP: SEK87.00) - Eyes on Smokefree margins

Largely in line with consensus, we expect strong Q1 revenue growth of c12.1% (consensus 11.9%), but with margins under pressure. We expect strong Zyn volume growth of c38%, driven by increased promotional activity in the US, which we expect to add to the margin pressure. However, we view the margin pressure as a temporary and welcome trade-off that should enable Swedish Match to secure a larger share of a highly attractive market. We reiterate our BUY and SEK87 target price.