THESIS-CHECK vs prior (HOLD/MED, buffett 7, base SEK 85): the re-analysed FY2025+Q1'26 record leaves the core numbers essentially unchanged — adjusted ROIC 8.8%, EP +SEK 77m, IC SEK 9,735m, price SEK 93 all match the prior note. Q1'26 confirmed structural demand (net sales +6.6%, +13.2% local currency) and finalised Cotton Classics at the preliminary SEK 580m with no PPA adjustment, closing one open uncertainty. New colour is modestly negative: LTM FCF is now slightly negative (-SEK 29m, corrected from a streamlined +39 that did not roll the window) on heavy warehouse-automation capex. Direction unchanged; thesis HOLDS, not revised.
New Wave Group designs, acquires and develops owned apparel brands — Craft, Cutter & Buck, Cotton Classics — sold through corporate/promo and retail channels. It is an acquisitive brand roll-up: goodwill plus trademarks SEK 1,814m are indefinite-life and unimpaired (a SEK 9m legacy CGU write-down aside), tested annually at 8.5% after-tax WACC with wide headroom except a modest Gifts & Home Furnishings trigger. The economics stay thin: ROIC 8.8% barely clears WACC and EP is just +SEK 77m.
The defining feature is working-capital intensity — inventory SEK 5,776m is 57% of LTM revenue and turns only 0.9x, so IC is ~96% working capital plus intangibles and ROIC swings on inventory efficiency. A deliberate investment phase (ERP/IT, warehouse automation) compresses margins near-term (operating margin 8.6% Q1'26 vs 9.7%) against a 20%-through-cycle target vs ~11% LTM, while leverage rises (net debt SEK 3,021m, 43% of equity) and the dividend was cut to SEK 3.00 — prudent, but still above LTM FCF.
Capitalising adjusted NOPAT of SEK 856m: at zero growth EV is ~SEK 10.7bn versus the actual ~SEK 15.4bn, so the market already prices ~2% perpetual growth. Netting SEK 3,021m net debt over 132.7m shares, GDP-growth fair value is ~SEK 85 — slightly below the SEK 93 price. No reverse-DCF discount while margins are soft and LTM FCF is negative; prior base target SEK 85 is carried unchanged (the record still supports it).
Base SEK 85 (−9%) de-rating toward through-cycle economics with margins still compressing; bull SEK 120 if the margin target advances, working capital normalises and operating leverage lifts EP; bear SEK 62 on a consumer downturn, inventory write-downs and further margin compression on the levered, WC-heavy balance sheet.
At today’s enterprise value the constant-ROIC reverse-DCF maxes out: even at its sustainable-growth ceiling (~8.4%, limited by ROIC 9% ≈ WACC 8%) it cannot reach the current EV. No-growth value is SEK 62/share (66% of price); the market prices in growth and/or a higher ROIC than booked — richly valued on this lens. Read the sensitivity grid.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 120 | ≥8% | +29% | 25% | Margin target advances + WC normalises + operating leverage lifts EP |
| Base | SEK 85 | ≥8% | -9% | 45% | De-rate toward through-cycle economics; margins still soft, FCF negative |
| Bear | SEK 62 | +1% | -33% | 30% | Consumer downturn, inventory write-downs, further margin compression |
| Prob-weighted | SEK 87 | — | -7% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 90 | 97 | 101 | 107 | 111 | 122 |
| 7.25% | 74 | 78 | 80 | 83 | 86 | 90 |
| 8.00% (base) | 62 | 64 | 65 | 66 | 67 | 68 |
| 8.75% | 52 | 53 | 53 | 53 | 53 | 50 |
| 9.50% | 45 | 45 | 44 | 43 | 42 | 37 |
Green = fair value above the current price of SEK 93.00. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Craft and Cutter & Buck give some brand pull and a platform for geographic and channel expansion.
Once the ERP/warehouse investment phase is through, the operating margin could lift toward the through-cycle target.
Faster inventory turns from the current 0.9x would free capital and lift ROIC materially — the key swing factor.
A long history of integrating brand acquisitions (Cotton Classics finalised with no PPA adjustment) and no goodwill impairments of note.
Torsten Jansson's control aligns long-term stewardship; the dividend cut to SEK 3.00 signals capital discipline in the investment phase.
Refresh: thesis HOLDS. New Wave is a founder-led brand roll-up that clears its cost of capital only thinly (ROIC 8.8%, EP +SEK 77m) on a working-capital-heavy, cyclically-exposed model, and the market still prices in growth it is not currently delivering. The one negative delta since the prior note is LTM FCF turning slightly negative on the automation capex. HOLD, medium conviction; base target SEK 85 (−9%) carried unchanged.
The path to a better entry is margin recovery toward the through-cycle target plus faster inventory turns — until then valuation offers no cushion and the risk sits with WC intensity, negative FCF and rising leverage.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| LTM net sales | 10,164 | Consolidated income statement, column '12 months apr-mar 2025/26' 📄 p.4 | Read directly off the company's own rolling-12M column (FY2025 10,019 - Q1'25 2,184 + Q1'26 2,328 = 10,164). Confirms escalation reason 3. |
| LTM operating result (= adjusted EBIT) | 1,129 | Consolidated income statement, '12 months apr-mar 2025/26' — Operating result 📄 p.4 | Company's own rolling-12M EBIT. Clean APM — no adjusted-EBIT bridge exists, so reported = adjusted. Confirms escalation reason 3. |
| LTM result for the period (net income) | 767 | Consolidated income statement, '12 months apr-mar 2025/26' — Result for the period 📄 p.4 | Company's own rolling-12M net income. Confirms escalation reason 3 (10164/1129/767 tie out exactly to the report). |
| LTM result before tax / tax expense | 1,013 | IS rolling-12M: PBT 1,013, tax -245 📄 p.4 | Effective tax rate 245/1,013 = 24.2% — the tax rate used for NOPAT. Ties to FY2025 recon 250/1,033 = 24.2%. |
| Adjusted NOPAT | 856 | EBIT 1,129 x (1 - 0.242) | NOPAT = adjusted EBIT 1,129 x (1 - effective tax 24.2%) = 856. No pretax or post-tax add-backs. See reconciliation note vs queue's 926 below. |
| FY2025 goodwill write-down | 9 | Note 8 intangible rollforward — Goodwill accumulated write-downs -28 -> -38, Write-downs line -9 📄 p.120 | The escalation trigger. 0.8% of LTM EBIT / 1.05% of NOPAT — immaterial; not added back per mttssn impairment policy. Confirms escalation reason 1. |
| Impairment-test WACC / terminal growth | 0.085 | Note 8 key estimates — WACC 8.5% after-tax (2026-2030 forecast), terminal growth 2% 📄 p.120 | Company's disclosed after-tax discount rate for goodwill/trademark impairment testing. No impairment need across CGUs; wide sensitivity headroom except a modest Gifts & Home Furnishings SEK 21-44m trigger. |
| PPA amortization kept in opex | 9 | Note 8 rollforward — trademark amort -5 + other intangible amort -5, goodwill amort -4 📄 p.120 | Recurring acquisition-intangible amortization of the brand-rollup model; deliberately NOT added back. |
| Cotton Classics acquisition — goodwill | 214 | Note 26 — Consideration 580 (earnout -497, deferred -84); identifiable net assets 366; goodwill 214 📄 p.138 | 2025 business combination (100% of Cotton Classics Handels GmbH, Austria, closed 1 Sep 2025). Sep-Dec 2025 contribution: revenue 429, EBIT 34, PAT 25. Q1 2026 confirms purchase price finalised at preliminary amount without adjustment (p.1). |
| PPP loan settlement (non-recurring) | 66 | Other operating income/expenses narrative + note 22 (p.134) 'Repayment of PPP-loans 66' 📄 p.117 | SEK 66m Q3 2025 non-recurring cost repaying previously-forgiven US Paycheck Protection Program COVID loans (interest/fees/related). Left in reported EBIT (not normalized). Confirms escalation reason 3. |
| Inventory | 5,776 | Consolidated balance sheet 31 Mar 2026 📄 p.9 | Largest single IC component (57% of LTM revenue); core capital-intensity risk of the apparel wholesaler; inventory turnover 0.9x. |
| Total equity | 7,097 | Consolidated balance sheet 31 Mar 2026 — Total equity 📄 p.9 | IC equity base at latest interim snapshot. Roll: FY 6,824 + Q1 NI 129 + Q1 OCI 144 = 7,097. NCI = 0. |
| Accumulated OCI (Reserves) | 586 | Statement of changes in equity — Reserves 442 (closing 2025-12-31) + Q1'26 OCI +144 | Translation/hedge reserve stripped from equity so IC reflects deployed operating capital, not FX swings (SEK strength drove Reserves 1,150 -> 442 in FY2025). |
| Interest-bearing debt ex-lease | 2,647 | Net debt 3,021 - lease liabilities 945 = credit-institute net debt 2,076; + cash 571 = 2,647 gross 📄 p.11 | Ex-lease credit-institute debt for IC. Cross-checks against Q1 BS total IB (3,364+228=3,592 = 2,647+945) and FY note 19 split (2,644+964). |
| Lease liabilities in IC | 945 | Q1 net debt bridge (of which lease-related change 19); FY note 19 (p.135) 31-Dec lease liab 964 (LT 803 + ST 161) 📄 p.11 | Capitalized into IC (retail store/warehouse leases = primary operating asset). ROU assets SEK 942m back this. IFRS 16 interest already below EBIT — no NOPAT add-back. |
| ROU assets | 942 | ROU rollforward — buildings/land 894 + equipment/installations 48 📄 p.121 | Supports lease_liabilities_in_ic = true; store/warehouse leases are integral operating assets. |
| Cash and cash equivalents | 571 | Consolidated balance sheet 31 Mar 2026 📄 p.9 | operational_cash = min(571, 2% x 10,164 = 203) = 203; excess_cash 368 subtracted from IC. |
| Adjusted invested capital | 9,735 | equity_ex_oci 6,511 + IB debt 2,647 + lease 945 - excess cash 368 | IC per mttssn formula. ROIC = 856/9,735 = 8.8%; EP = 856 - 8% x 9,735 = +77. |
| LTM free cash flow | -29 | LTM CFO 644 (FY 653 - Q1'25 219 + Q1'26 210) - LTM capex 673 (tang+intang: FY 644 - Q1'25 97 + Q1'26 126) 📄 p.13 | LTM FCF is slightly NEGATIVE (-29), driven by heavy warehouse-automation capex (LTM tangible capex ~642) plus inventory build — corrects the streamlined +39 which did not roll the LTM window. Reinforces the WC/capex-intensity flag. |
| Segment mix (Q1 2026) | 2,328 | Note 1 segments — Corporate 1,210 (EBIT 121), Sports & Leisure 962 (EBIT 104), Gifts & Home 157 (EBIT -25) 📄 p.16 | Corporate (promo) is the profit engine; Gifts & Home Furnishings is loss-making and the only CGU with an impairment sensitivity trigger. |
| Geography (Q1 2026) | 2,328 | Note 2 geography — N.America 527, Sweden 446, Benelux 348, Nordic-ex-SE 259, Rest of Europe 673, Other 76 📄 p.16 | USD/EUR-heavy revenue base; SEK strength drove a SEK -413m FY2025 translation drag on sales (FY note 18, p.130). |
How the mttssn view has evolved — each prior dated note is preserved.