Unified Nordic Beauty Platform And Logistics Upgrades Will Drive Long-Term Upside Potential

Catalysts

About Matas

Matas Group operates a leading Nordic beauty and well-being retail platform across physical stores and e-commerce.

What are the underlying business or industry changes driving this perspective?

• Scaling the unified digital platform across four Nordic markets is expected to lift conversion, upselling and app driven engagement, supporting continued revenue growth and operating leverage in e-commerce earnings.
• Leveraging a combined Nordic footprint to win exclusive international brands and roll out owned labels such as Nilens Jord beyond Denmark increases bargaining power and mix towards higher margin products, supporting gross margin expansion and EBITDA growth.
• Two modern, automated logistics centers that are now fully operational create room for tighter workforce planning, faster delivery and lower fulfillment costs, which could start to visibly affect net margins and cash conversion as inventories normalize after peak season.
• Effective capture of younger and social media driven customers via trend led assortments and retail media initiatives positions Matas to address structurally rising beauty and wellness demand, supporting steady like for like growth and resilient earnings through cycles.
• Disciplined cost control, additional KICKS synergies and pricing capabilities built in recent years may help offset FX and competitive pressures over time, with the group aiming to sustain an EBITDA margin around 15 percent and to grow earnings faster than sales.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Matas's revenue will grow by 5.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 3.3% today to 7.0% in 3 years time.
• Analysts expect earnings to reach DKK 714.3 million (and earnings per share of DKK 16.59) by about December 2028, up from DKK 287.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 12.2x on those 2028 earnings, down from 15.5x today. This future PE is lower than the current PE for the GB Specialty Retail industry at 15.5x.
• Analysts expect the number of shares outstanding to decline by 0.48% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.51%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The high end positioning of the KICKS chain makes it structurally more exposed to cyclical swings in Nordic consumer confidence. As a result, a prolonged period of cautious spending in Sweden and Norway could structurally cap like for like growth and slow group revenue and earnings momentum.
• Persistent FX headwinds between the Swedish krona and other Nordic currencies, combined with continued investment in pricing to stay competitive, may keep KICKS gross margins below management’s ambitions and limit net margin expansion even as sales grow.
• The aggressive rollout of physical stores by competitors in Sweden and broader category overlap online could dilute Matas Group’s market share gains and erode the sales uplift expected from new store openings and the unified digital platform, weighing on revenue growth and operating leverage.
• Structural increases in inventory levels tied to wider assortments and caution around new automated logistics centers could become permanent rather than temporary, depressing cash conversion, elevating gearing and constraining the company’s capacity to sustain buybacks and growth investments.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of DKK182.5 for Matas based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be DKK10.2 billion, earnings will come to DKK714.3 million, and it would be trading on a PE ratio of 12.2x, assuming you use a discount rate of 8.5%.
  
• Given the current share price of DKK118.6, the analyst price target of DKK182.5 is 35.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.