Equity research, Zinzino: Striking a balance between growth and profit

Growth has been impressive in 2023 and 2024, and Zinzino has handsomely beaten its sales targets. Since H2 2024, growth has accelerated even further. Last week, Zinzino presented preliminary sales figures for Q1 2025, showcasing an increase in total sales of an astonishing 60 per cent.

At the same time, the gross margin has been under pressure in 2024, partly due to increased remuneration to distributors. As the North American region gains in importance, potential tariffs also risk holding back earnings growth. However, with strong top-line growth and as new markets gain traction, we still expect more favorable economies of scale in 2025 compared to last year.

In March, Zinzino also launched in New Zealand, a new market in the Asia Pacific region. We are encouraged by expansion in this region, as there is clearly significant room for growth. New Zealand is a natural step, given that Zinzino is already present in Australia.

Higher sales estimates but further uncertainty regarding margins

Following the stronger-than-expected preliminary Q1 sales figures, we have raised our sales and estimates for 2025E-2027E by 4 per cent on average (see below). However, despite strong growth, we see slightly more uncertainty regarding margins due to the risk of tariffs weighing on profitability in the US. Hence, we assume no positive effect on earnings from our higher top-line forecasts but instead reduce our estimates somewhat. For now, we stick to the same base case valuation of around SEK 134 per share as previously. We will most likely review our estimates and valuation further following the Q1 report on 14 May, depending on, e.g., the outlook provided by the company and movements in peer group multiples.

Read our latest research update here.

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