KID.OL — mttssn research

HOLD

Conviction: MEDIUM

A well-run Norwegian/Nordic home-textiles retailer (Kid, Hemtex) with thin economic profit (+NOK 29M, ROIC ~9% ≈ WACC) and a price embedding ~5% perpetual growth — the reverse-DCF sits well below. Consumer-cyclical, fully valued. HOLD with a bearish lean.

Adj. ROIC

8.2%

WACC 8% → spread +0.2pp

Economic Profit

+NOK 9M

Thin — ROIC ≈ WACC

FCF Yield

6.1%

4.6% FCF yield; funds dividend

Price / Target

NOK 122 → NOK 120

-1% base; HOLD

Revenue (LTM)

NOK 4.0B

LTM; home textiles

EBIT Margin

9.9%

GAAP; private-label

EV / IC

1.92×

Enterprise value / invested capital

Net Debt

NOK 2.4B

Moderate

Thesis

Kid is a leading Nordic home-textiles and interior retailer (Kid Interiør in Norway, Hemtex in Sweden), a defensive value-for-money format with private-label depth. Adjusted ROIC of ~9% only matches the 8% WACC, leaving thin economic profit (+NOK 29M).

The equity at NOK 128 embeds ~5% perpetual growth (reverse-DCF) against thin returns and a competitive, consumer-cyclical home-retail market — leaving it fully valued relative to through-cycle worth.

Valuation · reverse-DCF & scenarios

Bridging adjusted NOPAT through net debt, reverse-DCF fair value sits well below the NOK 128 price (~5% implied growth) on thin returns. The dividend and steady cash generation support the equity, but there is little valuation cushion.

Base NOK 120 (−6%, modest de-rate); bull NOK 155 (consumer recovery plus Hemtex turnaround and store/online growth); bear NOK 95 (Nordic consumer weakness pressures home-category demand).

Market-implied growth

≥7.8%

model ceiling — EV implies more than constant-ROIC sustains

No-growth value / share

NOK 40

33% of price; rest = priced-in growth

ROIC − WACC

+0.2 pp

ROIC 8.2% vs WACC 8.0% — positive = value creation

CAP (priced-in)

30.0 yrs

years of excess returns the price implies (fades to WACC)

At today’s enterprise value the constant-ROIC reverse-DCF maxes out: even at its sustainable-growth ceiling (~7.8%, limited by ROIC 8% ≈ WACC 8%) it cannot reach the current EV. No-growth value is NOK 40/share (33% 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	NOK 155	≥8%	+27%	30%	Consumer recovery + Hemtex turnaround + omnichannel
Base	NOK 120	≥8%	-1%	40%	Modest de-rate; thin spread, full growth
Bear	NOK 95	≥8%	-22%	30%	Nordic consumer weakness hits home category
Prob-weighted	NOK 123	—	+1%	100%	Scenario-weighted expected value

Sensitivity — fair value / share at WACC × growth

WACC \ g	0%	3%	5%	8%	10%	15%
6.50%	73	80	84	90	94	103
7.25%	54	57	59	62	63	66
8.00% (base)	40	41	42	42	42	39
8.75%	29	29	28	27	25	19
9.50%	20	19	18	15	13	4

Green = fair value above the current price of NOK 121.60. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.

Method & data. NOPAT NOK 316, invested capital and ROIC 8.2% are observed (adjustments.json); WACC 8.0% and terminal g 2.5% are assumptions. EV→equity uses net debt NOK 2,439. The model holds ROIC constant (no fade) over the explicit horizon; the CAP figure instead fades excess returns to WACC.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Defensive value format

Value-for-money home textiles holds up relatively well in a downturn.

2. Private-label depth

Own-brand penetration supports margins and differentiation.

3. Dividend + cash generation

Solid free cash flow funds an attractive dividend.

4. Hemtex optionality

A Swedish-business turnaround would lift group returns.

5. Omnichannel growth

Store-plus-online expansion is the growth lever.

Key risks

Thin economic spreadROIC ≈ WACC; little value-creation buffer and a full implied growth.
Consumer cyclicalityDiscretionary home/interior spend is sensitive to the Nordic consumer cycle.
CompetitionHome-textile and discount competitors pressure pricing and share.
Sourcing/FXImport-heavy sourcing exposes margins to cost and currency moves.
Full valuationPrice embeds ~5% growth against thin returns.

Conclusion

Kid is a decent, defensive home-textiles retailer whose thin economics and full implied growth leave the equity fully valued. HOLD with a bearish lean, medium conviction; base target NOK 120 (−6%).

A consumer-driven pullback toward the reverse-DCF range, or a Hemtex-led return-on-capital improvement, would improve the risk/reward.