AXFOY - Why Axfood Is Approaching My Rotation Price

2024-03-08 10:52:07 ET

Summary

• Axfood is a dominant player in the Swedish FMCG market with strong sales growth and impressive operating margins.
• The company's FY23 results were excellent, outperforming the broader market and recording a double-digit net sales increase.
• The valuation of Axfood remains too high, with a projected rate of return below 2% per year, making it a "HOLD" for now.

Dear readers/followers,

It's been some time since I updated my thesis on Axfood ( AXFOY ) ( AXFOF ). My last article on the company can be found here , and it was, as I've rated it for a while, a "HOLD". I've viewed Axfood as fully valued for some time. While I am conscious of the possibility of an upward movement to over 300 SEK/share for the native share price, I am nonetheless cautious of buying the company at any price above 235 SEK, as trends currently are.

I may raise this PT in the future to reflect different upsides for this company, but Axfood, since the privatization and pulling off ICA AB from the stock market, remains virtually the only FMCG in the entire Swedish market that investors can actually buy. This provides a certain degree of "crowding" to this investment, which I believe further inflates an already inflated valuation....

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