• A rapid consolidator in a steadily growing, fragmented market
• 12% adj. EBITA CAGR '22-'25e, >20% M&A growth potential
• 10-8x EV/EBITA '23e-'25e, 10-9% FCF yields

Margin- and value-accretive M&A in a green market

Green Landscaping Group ('GLG') is a Nordic (Sweden 56% of '22 sales, Norway 38%, Finland and Baltic 5%) serial acquirer that has established itself as a leading player (~5% market share) in the fragmented and steadily growing market for the landscaping and maintenance of outdoor environments. Roughly 60-70% of sales stem from public customers, where contracts are small (SEK 0.5-5m) but generally last for 3-5 years. By acquiring margin- and value-accretive units at 4-6x EBITA, combined with 4% org. sales growth p.a., GLG has through its decentralised M&A model achieved a 42% sales CAGR and a 63% adj. (ABGSCe) EBITA CAGR '18-'22. After a combination of high-margin recently acquired units and improvements in legacy units, GLG delivered rep. EBITA margins of 7.4-8.5% '21-'22, which we expect will reach 9.1-9.5% '23e-'25e.

Resilient demand, continued M&A headroom

We expect resilient demand for outdoor services as well as pricing clauses to support a 4% org. sales CAGR '22-'25e, which combined with already-made M&A should yield a 9% sales CAGR and a 12% adj. (ABGSCe) EBITA CAGR. Although we do not include unannounced M&A in our estimates, we believe that GLG has headroom to add another 15-60% to '23e-'25e EBITA through value-accretive M&A, and could maintain an earnings growth pace well above 20% p.a. at a stable gearing level (2.1-1.0x ND/EBITDA '23e-'25e) and improving ROCE (15-17% '23e-'25e).

Fair value range of SEK 59-148

Compared to other, 'newer' service M&A peers, GLG has historically delivered growth above peers but at a lower profitability. For '22-'25e, however, we expect GLG to deliver both growth, margins, ROCE and FCF in line with peers. The share is trading at 10-8x EBITA '23e-'25e, ~40-30% below key peers and our fair valu