Alligo AB (publ) (ALLIGO-B.ST) fair value

ACCE thesis

Alligo distributes and sells premium bicycles, components and accessories through its Biketec and Bike Republic chains and its Biketec wholesale business, and it also runs the Cycle-related brands that sit under its Nordic and Baltic retail network. Its edge is a high gross margin of 41.2% for a distributor, which points to a retail-weighted mix with own-brand and accessory sales that competitors selling bikes at thin wholesale spreads do not capture. Revenue grew 5.7% and the operating margin stands at 5.7%, so the business is converting that gross margin into modest profit rather than yet showing operating leverage. The thesis rests on whether the cycling category's post-pandemic normalisation has bottomed and whether management can lift operating margin from here. At an 18.2 trailing P/E and a 9.3% ROE, the stock is priced for a recovery that has not yet clearly shown up in the earnings, which makes it worth a closer look at the inventory cycle and margin trajectory before any position is considered.