NIBE Industrier AB: Swedish Compounder Ready for a Rebound after 50% Crash?
High quality compounder and global leader of premium heat pumps with some short-term pain but promising long-term outlook
Summary
Strong Growth: Revenue increased over 60x since IPO in 1997, and still both, revenue and EPS showed 5y-CAGRs of 15.7% and 18.2%, respectively
High Capital Efficiency: Growing operating profit margins with 14.9% in FY23, and 5y avg. ROCE of 12.8% and ROIC of 9.8% underline the high cash flow generation capability
Significant Management Ownership: Former board members and the management team, inclduing the CEO, collectively own around 45% of the company
Demand Fluctuations for Heat Pumps: Elevated inventory levels in the value chain as reported in 4Q23 indicate that wholesalers and installers are likely to reduce their stocks, resulting in decreased demand and lower profits in the short term
Green Transition and Government Support: As consumer choices are frequently influenced by immediate subsidies rather than the long-term environmental impact of products, the consistency of policy changes, such as the REPower EU plan and the Inflation Reduction Act, will largely impact future growth