EV Integration And Multichannel Expansion Will Create Business Value

Key Takeaways

• Expansion into older car servicing and new EV brands positions Bilia for resilient, high-margin recurring revenue as vehicle populations age and electrification accelerates.
  
• Strategic acquisitions, physical-digital integration, and focus on core assets support stable earnings amid industry shifts toward wholesale models and extended car lifespans.
  
• Structural changes in car demand, channel strategies, and brand partnerships are pressuring profitability and exposing Bilia to sustained margin and revenue risks.

Catalysts

Operates as a full-service supplier for car ownership in Sweden, Norway, Luxemburg, and Belgium.

• Bilia is accelerating its targeting of the older car segment and integrating new EV brands such as Polestar, XPENG, and Lynk & Co into its workshops, positioning the company to capture incremental aftersales and service revenue as the car population ages and EV adoption rises-likely supporting high-margin, recurring earnings growth.
  
• The company's investment in physical and digital multichannel capabilities, with approximately 180 facilities and expanding online services, aligns with the observed industry trend of manufacturers moving back towards traditional wholesale models. This positions Bilia to benefit from sustained sales volumes and improved net margins as digital and physical channels converge.
  
• Bilia's recent strategic acquisitions, such as the Volvo Lastvagnar truck operations with ~4.5% operating margin, and continued disciplined capital allocation (e.g., divestment of non-core facilities to fund expansion with minimal impact on net debt), are expected to enhance long-term revenue and operating margin stability.
  
• The sustained demand and positive organic growth in Bilia's service business, particularly in Norway and Western Europe, reflects the trend of extended vehicle lifespans and greater regulatory requirements for maintenance and compliance, supporting resilience in recurring service revenues and overall earnings.
  
• Signs of pent-up demand recovery in new car order intake and stable used car stocks suggest potential for a cyclical earnings rebound, particularly as private consumption and new campaigns are expected to drive higher vehicle sales and support top-line revenue growth in the coming quarters.

Bilia Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Bilia's revenue will grow by 3.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.6% today to 2.8% in 3 years time.
• Analysts expect earnings to reach SEK 1.2 billion (and earnings per share of SEK 11.58) by about August 2028, up from SEK 641.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.2x on those 2028 earnings, down from 16.9x today. This future PE is lower than the current PE for the GB Specialty Retail industry at 22.5x.
• Analysts expect the number of shares outstanding to grow by 0.62% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.12%, as per the Simply Wall St company report.

Bilia Future Earnings Per Share Growth

Risks

• Ongoing price pressure and weak demand for fully electric cars in Sweden is compressing used car margins and creating inventory risk, potentially reducing both revenue and net margins given Bilia's significant exposure to this segment.
  
• Lingering declines in new car sales-Sweden's total car market remains around 20% lower than the past decade's average-may undermine top-line growth and limit earnings expansion if the market doesn't recover sustainably.
  
• Bilia's reliance on physical dealerships as a competitive advantage risks becoming a liability if digitalization accelerates or if manufacturers once again commit to agency or direct sales models, threatening revenue and long-term margin structure.
  
• High dependence on a limited number of premium brands and divestment of operations linked to key OEMs (e.g., Mercedes-Benz Trucks) exposes Bilia to further contract or partnership changes, impacting revenue stability and earnings predictability.
  
• The company's lower profitability in core segments (especially service operations and used cars in Sweden) amid a shift toward older vehicles and evolving customer preferences suggests structural headwinds that could limit EBITDA growth and compress operating margins over the long term.

Valuation

• The analysts have a consensus price target of SEK146.0 for Bilia based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK44.3 billion, earnings will come to SEK1.2 billion, and it would be trading on a PE ratio of 14.2x, assuming you use a discount rate of 8.1%.
• Given the current share price of SEK117.1, the analyst price target of SEK146.0 is 19.8% 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.