Profit warning for Q4

Small Caps, Big Ideas – December 2024

Coor Service Management Holding AB: 1 director

A director at Coor Service Management Holding AB bought 30,000 shares at 34.760SEK and the significance rating of the trade was 59/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the l...

Cyclical elements behind miss

Coor Service Management (Buy, TP: SEK54.00) - Weak across the board

Q3 was weak across the board, although the strong contract renewal trend should have created a more stable base for growth and efficiency improvements. We have cut our 2024–2026e EPS by 11–8%, still seeing FCF normalisation during Q4e, giving Coor headroom to keep a SEK3.00 DPS (yield 8.1%) 2024e. We reiterate our BUY but have cut our target price to SEK54 (59), with pressure rising to re-establish Coor’s earnings and FCF credentials to drive a re-rating back to historical levels.

Headwinds in Denmark behind miss

A step back in Q3e, but acceleration from Q4e

Small Cap Miner – August 2024

Negative trend into Q3

Q2 in line but softer outlook for Q3. We cut adj. EBITA by 4-2% on '24e-'26e. 10-8x EV/EBITA adj. and 7-13% FCF yields on '24e-'26e.

Coor Service Management (Buy, TP: SEK59.00) - Improving in retention r...

Coor reported a mixed Q2, slightly below expectations, but more importantly the strong contract renewal trend has already derisked 2024, with good progress now on derisking 2025. This suggests a more stable base for growth and efficiency improvements. We reiterate our BUY and SEK59 target price on the basis of the strong yield support, with pressure mounting on management to re-establish Coor’s earnings and FCF growth credentials to drive a re-rating back towards historical levels.

Cost savings taking a bit longer to realise

Coor Service Management (Buy, TP: SEK59.00) - 2024 renewals already de...

Coor reported a solid Q1, in line with expectations, and we have only tweaked our forecasts following the results. A strong contract extension trend has derisked 2024, with contract volumes YTD already matching the full year 2023 delivery, suggesting a more stable base for growth and efficiency improvements. We continue to like its FCF profile, low operating risk, scope for value-enhancing acquisitions, and strong yield support. We reiterate our BUY and have raised our target price to SEK59 (57....

Coor Service Management (Buy, TP: SEK57.50) - Reset DPS allows for fut...

We believe Coor improved in Q4, well-offsetting the lost Ericsson contract, with its model still showing strong FCF. We have only tweaked our 2024–2026e EPS. We continue to like its FCF profile, low operating risk, scope for value-enhancing acquisitions, and strong yield support, with the reset 2023 DPS of SEK3.00 (7.2% yield) allowing for de-gearing towards 2x net debt/EBITDA and a 2024–2026e DPS growth scenario. We reiterate our BUY and have raised our target price to SEK57.5 (56).

Coor Service Management (Buy, TP: SEK56.00) - Instituting action progr...

Q3 was weak, with continued profit margin pressure, but Coor is initiating an action programme for a quicker trend reversal. We have cut our 2023–2025e EPS by 12–7%, with the ambition to normalise gearing towards 2x net debt/EBITDA also suggesting a lower dividend payout than our previous expectation. We still see strong yield support and reiterate our BUY, but have cut our target price to SEK56 (75) on lower multiples assumptions.

Coor Service Management (Buy, TP: SEK75.00) - OK Q2 without that littl...

Q2 broadly matched Q2 expectations, and we have only tweaked our underlying forecasts. The lost Ericsson contract increases pressure on management to re-establish Coor’s growth credentials, with the company still seeing a “strong” new contract pipeline and solid variable volumes. Meantime, we still see headroom for Coor to maintain high dividends given its FCF generation. We reiterate our BUY but have lowered our target price to SEK75 (77).

Northern Lights

Coor Service Management (Buy, TP: SEK77.00) - Down but not out after E...

Coor announced the loss of its oldest client, Ericsson, which chose to consolidate its IFM volumes with one global supplier. Thus, we have cut our 2024–2025e EPS by 9–10%, but we still see headroom for Coor to maintain its high dividend payout given its strong FCF generation lending downside support. We reiterate our BUY but have cut our target price to SEK77 (100), with the company still suggesting a good pipeline of contracts to offset the loss.

Coor Service Management (Buy, TP: SEK100.00) - Stronger new contract p...

Coor reported a solid Q1, in line with expectations, and we have only tweaked our forecasts following the results. The company now sees a ‘strong’ new contract pipeline again (previously only ‘solid’), and still-recovering variable volumes suggest a limited recessionary effect. We like its FCF profile, low operating risk, scope for value-enhancing acquisitions, and strong yield support. We reiterate our BUY and SEK100 target price.

Northern Lights

Coor Service Management (Buy, TP: SEK100.00) - Yield case reinforced

We believe Coor’s improved Q4 indicated that Q3 was a hiccup, with its model still showing strong FCF- generation capacity. Positive underlying trends in Norway and Denmark are adding stability, and we have slightly raised our EPS forecasts for 2023-2025e post results. We like its FCF profile, low operating risk, scope for value-enhancing acquisitions, and strong yield support, reflected in its maintained DPS of SEK4.80 (7.1% yield). We reiterate our BUY and SEK100 target price.