Equity research Zinzino: Solid growth in Q2 and M&A on the agenda

Yesterday, 3 July, Zinzino released its preliminary sales figures for the second quarter. The figures show a total revenue of SEK 505m, representing a 24% growth. In our latest research update, we anticipated total revenues of SEK of 512m. Central Europe and North America were key growth drivers, with sales increasing by 36% to SEK 137m and 136% to SEK 46.1 million, respectively. In light of the preliminary sales figures, we have made marginal adjustments to our full-year forecasts. Our new forecasts for the full year 2024 are net sales of SEK 2,040m (2,058), gross profit of SEK 748m (754) and EBITDA of SEK 263m (265).

Zinzino will publish its Q2 report on 30 August. The focus will be on profitability. As shown in the second table below, we expect net sales of SEK 480m and total revenues of SEK 505m. We also expect a gross profit of SEK 184m, corresponding to a margin of 36%, and an EBITDA of SEK 65m, corresponding to a margin of 13%.

We calculate a fair value per share of SEK 84.9 (89.7). The downward revision is mainly due to lower valuation multiples for the peer group used for comparison purposes.

Meanwhile, the news flow has been strong. Among other things, 49% of the shares in the Cypriot olive oil producer Cleanthi have been acquired, with an option to buy another 1%. This will secure the supply of olive oil while Cleanthi contributes with revenue from external sales. Zinzino will pay a fixed purchase price of EUR 1.9m at closing, of which EUR 1.2m in newly issued Zinzino shares. In the shorter term, we believe that the letter of intent to acquire Zurvita is even more interesting, not least because it would add around SEK 300m in annual revenue before synergies. At the same time, the sales synergies are apparent when an extensive network of distributors is introduced to new products from Zinzino. However, it is important to note that a letter of intent does not guarantee that a deal will materialise. Thus, we are not yet modelling any revenue and profitability contribution from Zurvita.

Read our latest research update here.

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