Duell - Gaining traction
Duell's FY 2024 showed promising signs of a return to profitable growth track, following a challenging 2023 resulting in a rights issue. While we see the company gaining traction, the conditions remain slippery.
European powersports powerhouse
Duell is a powersports aftermarket distribution company established in 1983, headquartered in Mustasaari, Finland with warehouses and sales offices across Europe. It serves as a source for a diverse range of equipment and parts in all major powersports categories, acting as a convenient one-stop-shop. With approximately 600 brand owners and manufacturers, including Duell's own brands, the company ensures a wide supply network. Dealers benefit from Duell's distinctive brand and product selection, offering roughly 130,000 SKUs with fast delivery times across Europe. Duell also acts as a valuable online partner for dealers who are adopting the omni-channel approach in their operations.
Growth in Europe remains the key
For FY 2025, Duell expects organic net sales with comparable currencies to be at or above the previous year’s level while adjusted EBITA is anticipated to improve. We now forecast net sales of EUR 129m (+3.8% y/y) and adjusted EBITA of EUR 7.9m (margin 6.1% vs. 5.0% FY 2024) for FY 2025E. The main growth driver in our estimates for 2025E and onwards remains European markets namely France, Germany, the United Kingdom and the Benelux region. For Q2/25, we expect organic growth to slow slightly due to stronger comparison period and a weaker winter period in the Nordics, which likely impacted snowmobile related sales more than we saw in Q1. Overall, we still expect relatively flat sales as we model continued growth in Europe. We note that although the snowmobile category plays a significant role during the company's winter season, it is smaller in scale compared to summer categories such as motorcycling and biking.
BUY with a TP of EUR 8.5 (prev. EUR 9.0)
After some estimate revisions, we update our TP to EUR 8.5 while we maintain rating at BUY. Duell is priced at 6-5x EV/EBITDA and 7-5x adj. P/E on our estimates for FY 2025-2026E. The current pricing presents a noticeable discount to the fair value derived from our discounted cash flow model. We see the valuation cautious especially considering the current depressed earnings.