North Media A/S (NORTHM) - A Cash-Rich Legacy Business Poised to Inflect

North Media A/S (NORTHM) is a Danish media and technology conglomerate focused on physical distribution and digital B2C platforms. The stock is down more than 20% over the last 5 years, reflecting a series of structural and strategic challenges. Much of this underperformance stems from the secular decline in print media, which has pressured its core business, FK Distribution (FKD), and led to skepticism around its acquisition of Svensk Direktreklam (SDR) in 2023. In response, NORTHM has pivoted more towards digital ventures to offset declining revenue and pressured margins, but these initiatives have yet to deliver meaningful scale and profitability. And the suspension of its 2024 dividend earlier this year has further dampened investor sentiment.

That said, the sell-off seems overdone. NORTHM still holds an equity portfolio worth more than DKK 700m (almost covering the entire market cap), owns valuable real estate, and is currently priced at less than 2x the low-end of FY25 EBITDA guidance. And thanks to the rollout of its successful FKD system, SDR is nearing profitability. With several improvements in motion and a valuation reflecting extreme pessimism, is NORTHM now positioned to inflect, and by extension, offer meaningful upside from here?

Business Model

NORTHM’s business is divided into two main segments:

1. Last Mile (FK Distribution and Svensk Direktreklam)

2. Digital Services (BoligPortal, Dayli, and Bekey)

Last Mile is NORTHM’s legacy business focused on the distribution of physical media through FKD and, more recently, SDR.

FKD is a leading distributor of unaddressed printed material (e.g., leaflets and local newspapers) based in Denmark, delivering more than 1.1b items annually. 1.9m households or 62% of total Danish households receive their advertising leaflets, with 2.3m Danish households (76%) also receiving local weekly newspapers. These figures disprove the speed of the structural decline narrative as Danish households still enjoy physical deliverables despite increased digitization. NORTHM also caters to increased optionality, enabling households to selectively opt in to specific leaflets instead of everything through its NejTak+ offering. ~450.000 households have already signed up for the offering, illustrating NORTHM’s ability to adapt to changing consumer preferences and retaining customers.

Change in household orders and printed matter volume - From NORTHM’s 2024 annual report

• JaTak = Households that accept all unaddressed advertising (e.g., leaflets and print ads)

• NejTak = Households that opt entirely from receiving printed advertising material

• NejTak+ = Personalized opt-in solution where households can choose which leaflets they want to receive

SDR was acquired by NORTHM in December, 2023, and is the largest private distributor of printed matter and local newspapers in Sweden. It was a logical target as SDR’s operations were inefficiently run, and implementing the successful model of FKD could lead to meaningful synergies over time. The transformation is well under way, but not without short-term pain. In FY24, the DKK segment was hit with a DKK 155m write-down driven by significantly lower anticipated leaflet volumes and a material earnings decline. Despite current losses, management expects SDR to become EBIT positive in FY26. Its extensive reach, with 4.6m households receiving local weekly newspapers (91%), 2.2m receiving leaflets (49%), and 1.1m receiving both, underscores the substantial profitability potential with a leaner and more efficient model in place.

SDR’s printed matter volume - From NORTHM’s 2024 annual report

Digital Services is a portfolio of digital platforms connecting businesses and consumers across various sectors. It is comprised of BoligPortal, MineTilbud (Dayli) and Bekey, and represented ~14% of 1Q25 revenue.

BoligPortal consists of BoligPortal.dk and BostadsPortal.se. BoligPortal.dk is Denmark’s leading rental housing platform, connecting professional and private landlords with tenants. In FY24, the platform had 622.000 monthly visitors, 114.000 advertised rental homes, 36.000 signed moving reports, and 28.000 signed rental contracts. Its sister portal, BostadsPortal.se, while smaller, reached 243.000 monthly visitors last year, and management believes it has vast market potential.

Revenue mix/growth, and EBIT margin - From NORTHM’s 2024 annual report

More and more landlords and tenants are moving towards online rental management, from listing properties to moving reports and signing contract. Its digital tools streamlining these tasks positions it well to capitalize on the increasing demand for rental properties in urban areas like Copenhagen. And its capital-light model should contribute meaningfully to group profits over time as its share of the revenue mix continues to increase.

Dayli, formerly known as MineTilbud, is one of Denmark’s leading platforms for the online distribution of digital promotional newspapers and catalogs. In January 2025, MineTilbud’s activities were spun out of FK Distribution and renamed Dayli to support new business opportunities. These include expansion into Sweden, where Dayli and the digital publishing platform Publisher were introduced.

The Dayli platform connects retailers with consumers through the online distribution of promotional content, including digital leaflets, catalogs, and special offers. While the platform primarily caters to consumers, it also serves a growing base of diverse business segments. The platform has more than 1.5m users (or ~36% of Danes above 18), surpassed 1.2m weekly visitors in 2024, and achieved a 49% engagement-to-visit rate.

Users and reads - From NORTHM’s 2024 annual report

In 2024, Dayli acquired the Danish software firm Avio to access its proprietary publishing technology, which now represents the foundation of Publisher. Publisher enables retailers and suppliers to manage and distribute content across both digital and physical channels, complementing Dayli’s offering well. This also strengthens its value proposition as a one-stop marketing and publishing solution for the retail industry.

Bekey provides and services digital access systems for locked stairwell doors (SmartRelay) and private home doors (SmartLock) in Denmark and Norway. In 2024 alone, the Bekey system facilitated more than 14m door openings, including 1.4m by distribution customers (e.g., logistics and meal delivery companies). Access is managed through the cloud-based system Netkey which assigns encrypted digital keys to authorized users, and the users can then unlock doors or access the SmartKeyBox (physical lockbox they also offer) using the Bekey mobile app on their phone with all access events being centrally registered and logged.

In addition to the above companies, NORTHM acquired a 50% stake in the Danish data-driven fintech company Karman Connect A/S in 2016. Karman connects lenders and borrowers for unsecured consumer loans across Europe, and delivered revenue and EBIT of DKK 16m of (65% y/y growth) and DKK 1.3m in 1Q25, respectively. Management notes that this year is off to a notably better start than 2024 as Karman experienced strong demand across markets and partners, suggesting that the revenue decline since 2022 could be a thing of the past.

From NORTHM’s 2024 annual report

Chairman Stepdown and Transfer of Majority Stake

Recently, NORTHM announced that its current chairman, Ole Borch, is stepping down from his position. It is not due to any governance related issues, but rather because he is taking on the role as chairman of a new foundation established on behalf of the company’s founder, Richard Bunck. The press release also disclosed that this foundation is expected to take over the majority holding in NORTHM currently held by Baunegård ApS, Bunck’s holding company.

The implications of the above are twofold. First, it ensures long-term stability, but this at the expense of strategic flexibility. NORTHM will likely become insulated from market pressure, hostile bids, and activist investors. I am only speculating, but unless a meaningful chunk of Bunck’s holding is sold to cover philanthropic activities, the strategy will likely emphasize legacy and executing his vision over aggressive growth, accretive divestitures, and other value-creative levers.

If the focus on enterprise sustainability over value creation does in fact come to fruition, this may lead NORTHM to keep underperforming divisions alive, retain excess capital (e.g., the current equity portfolio of ~DKK 700m), and avoid a complete sale. In other words, since the foundation’s mandate will likely reflect Bunck’s values and current strategic view, the sub-optimal capital allocation pattern could persist. The lack of large activist investors and pressure from the board could also lead to management becoming complacent.

While the above could prove to be a material risk from a shareholder perspective down the line, I believe the valuation more than accounts for this as I will show later on.

Management and Compensation Structure

Richard Bunck is the founder and vice chairman of NORTHM. He founded Reklame Distributionen in 1965 (later became Forbruger-kontakt A/S) and served as CEO of NORTHM from 1965 to 2004. He owns ~11.3m shares, equivalent to 63% of the company. This should in isolation align the interests of insiders and shareholders, but the return over the last 5 years have been disappointing to say the least.

NORTHM 5-year stock price performance - From Refinitiv Eikon

Overall, insiders own a little south of 12m shares or ~64% of shares outstanding.

Management receives annual base salaries ranging from DKK 2m to DKK 4.4m. The 2018 option program unfortunately expired last year, and I hope a new long-term stock based compensation plan is introduced swiftly to better align management and shareholder interests.

A portion of annual compensation is variable pay and based on (1) nominal EBIT, (2) change in revenue, and (3) change in EBIT for the business unit or area each executive is responsible for. If any of the parameters are negative in a fiscal year, they have a downward impact on total variable remuneration (nominal EBIT was positive in FY24 but was offset by a negative change in EBIT and revenue, resulting in zero variable pay for the year).

To better ensure a strong focus on long-term and stable value creation, 50% of the cash-based variable pay is deferred and paid the following year only if the result is still in accordance with the company’s remuneration policy.

The above compensation plan has room for improvement, and it will prove especially important as Bunck’s holding is transferred to the foundation as this will likely result in less board pressure and shareholder involvement.

Valuation

FK Distribution

FKD is NORTHM’s flagship business. It represents 55% of group revenue and delivered 124m in FY24 EBIT. While SDR is still in a transformation phase, FKD has successfully executed on the same strategy. It is difficult to determine a suitable multiple for both FKD and SDR as all northern unaddressed mail, leaflet distribution, or local newspaper delivery companies are state-owned or privately held. The closest publicly listed “peer” DHL (purely due to its distribution networks), trades at ~11x forward EBIT, but its size, economies of scale, and differing business mix justifies a premium. As such, I have used a 5x EBIT multiple, somewhat arbitrarily but also to remain conservative. This seems fair (and potentially overly conservative) when accounting for FKD’s efficient operations and the stickiness of physical deliverables in Scandinavia despite ongoing digitization trends. Based on the midpoint of FY25 EBIT guidance, this equates to 70% of the current market cap.

Svensk Direktreklam

SDR is well under way with its transformation, primarily in adopting FKD’s automated packing technology, and the automation rollout is expected to be fully implemented by H2 2025. This transition moves SDR from manual, franchise-based packing to centralized, machine-based operations in-house, which is expected to reduce labor costs and improve efficiency. This paired with the pivot to youth-based distributors for the delivery of advertisements and leaflets should meaningfully lower costs, and as such, also justify a 5x EBIT multiple as SDR becomes EBIT positive.

The EBIT estimate is 1 year further out, and this coupled with execution risk, warrants a higher discount rate. Still, if SDR is able to deliver FY26 EBIT of DKK 40m, the fair value could cover 22% of the current market cap.

BoligPortal

BoligPortal is a capital-light and scalable business, well-positioned to further capitalize on the rental trend in urban areas. While EBIT was heavily stifled in FY25, largely due to higher strategic investment costs and a weaker rental market in Denmark, strategic partnerships and further streamlining should ensure continued EBIT growth. Peers trade at ~24x times EBIT on average, but scaling the multiple for growth and EBIT margin differences, I have applied a 14x EBIT multiple.

Based on the midpoint of FY25 EBIT guidance (DKK 35m), this translates to DKK 490m at year-end 2025 or DKK 26/share today.

In other words, FKD, SDR and BoligPortal cover more than the entire current market cap, and that is without accounting for the large equity portfolio, valuable real estate, and Dayli, Bekey and Karman.

Dayli (MineTilbud)

Since Dayli is currently unprofitable, and the timeline for profitability is uncertain, I have decided to value it on an EV/S basis. Again, it is difficult to find accurate peers as the business activities are quite niche. The Polish company Wirtualna Polska (WPL) has certain overlapping activities, but its wide array of digital services (e.g., technology and sports broadcasting) makes it an unsuitable peer. Its 22% 3-year revenue CAGR and 18% EBIT margin also explains why it trades at ~1.5x sales, a multiple that would likely overstate Dayli’s fair value. Polaris Media (POL) on the other hand, the Norwegian legacy media conglomerate, trades at only 0.4x, largely due to its lack of growth and volatile bottom line. Using the midpoint of these two or a slight premium to POL, at least until the path to profitability becomes more clear, seems like a sensible choice.

Applying a 0.5x EV/S multiple to the midpoint of FY25 guidance yields a fair value of DKK 15.5m, or DKK 0.73/share when discounted back at 10%.

Bekey

Bekey is in a similar position, and its negative EBIT margin has actually accelerated in recent years, worsening from -57% in FY22 to -121.4% in FY24, as it continues its efforts building infrastructure and improve internal processes.

While adjacent peers trade at close to 2.5x sales, it is obvious that their consistently positive revenue growth and higher EBIT margins warrant this. If Bekey is able to streamline operations further, and reaps the benefits of its current restructuring efforts, a rerate could be justified down the line. In the meantime, its high fixed costs and low scale will likely limit profitability, and a meaningfully lower multiple is therefore justified.

I have applied a 0.5x EV/S multiple to Bekey too, and doing so translates to a PV/share of DKK 0.5.

Karman Connect

NORTHM also holds a 50% stake in Karman Connect. As mentioned earlier, 2025 has been off to a great start for the fintech company, but its heavy tilt towards unsecured loans results in substantially higher credit risk and consequentially a lower multiple.

While 2022 was a great year from a profitability perspective, with ~24% y/y revenue growth and an EBIT margin of close to 25%, revenue has since nosedived 35% while EBIT has turned negative. EBIT was also consistently positive (EBIT margin of 11.3-24.7%) in the 3 preceding years, but I will value Karman based on sales as the full-year EBIT figure remain uncertain.

Both LendingClub and Upstart are trading at high EV/S multiples, and this despite negative revenue growth and low-to-negative margins. If Karman sustains its current trajectory throughout the year, a similar multiple could be warranted. But would Karman be fairly valued at such a multiple, or is it LendingClub and Upstart that are too richly priced? I view the latter as more likely, and will value Karman at 1x revenue run rate.

With NORTHM’s 50% stake, this equates to a little south of DKK 2/share.

Equity Portfolio

In addition to the wide array of subsidiaries, NORTHM also holds a large equity portfolio. As of April 30, 2025, the total portfolio value was DKK 634.8m, and adjusting for interim returns, it is currently worth north of DKK 700m. While this is a nice addition, the portfolio concentration and individual holdings are quite worrisome.

NVIDIA constitutes roughly 37%, with the portfolio holdings trading at ~30x forward earnings on average. A low-hanging fruit would be to completely liquidate the portfolio and funnel the cash into buybacks, and while analysts have been pushing for this, I have not found any indication of management giving this real consideration yet.

If they eventually decide to sell the portfolio, this will incur a capital gains tax of 22% (the Danish corporate income tax rate applies here too). Since NORTHM does not disclose what portion of the current portfolio value that is gains or when the portfolio was created, I had to make certain assumptions. A recent equity report noted that the portfolio has appreciated significantly since 2015, and assuming it has delivered a 15% CAGR since then, this implies that the 2015 portfolio value was around DKK 172m. If we treat this figure as the initial investment, the current taxable gains are DKK 573m.

Based on the above assumptions, I believe the after-tax value of NORTHM’s portfolio is ~DKK 620m.

Real Estate

NORTHM owns the property at Gladsaxe Møllevej 28, 2860 Søborg, its corporate headquarters, through its wholly owned subsidiary, North Media Ejendomme ApS. Several of its subsidiaries, including FK Distribution and Dayli, are also registered at this address. The property sits in a growing, well-connected suburb of Copenhagen, and as such, is likely to continue rising in value over time. Its current carrying value, net of accumulated depreciation, is only DKK 4.7m, and heavily understates the fair value.

The vast majority of NORTHM’s property holdings are tied to the investment properties held by North Media Ejendomme Aps, which had a carrying value of DKK 144.7m as of the most recent filing.

For the sake of simplicity, I will use the 1Q25 reported property value of DKK 237.5m as a proxy for the fair market value of NORTHM’s total real estate holdings.

SOTP

By combining the value of all the different parts, we get an idea of the SOTP value. NORTHM also had around DKK 3.8m of unallocated expenses in 1Q25. Using the run rate figure and applying a 5x multiple as a shortcut for the “terminal” value of these expenses, this equates to around DKK 85m. Adding cash, the after-tax value of the equity portfolio, and real estate, and netting out interest-bearing debt (including lease liabilities), I believe NORTHM is worth close to DKK 100/share. Note that the real estate is valued through a combination of historical cost, less accumulated depreciation, and fair value models, likely understating the true value of the overall portfolio. I have also applied a 30% discount (assumes a 30% drawdown) to the equity portfolio given the high level of concentration and stretched valuations in most names.

DCF

Alternatively, one could value NORTHM from a DCF perspective. This is less reliable as financials in any one year could be heavily skewed by the performance of the equity portfolio paired with fluctuating performance in the different subsidiaries. Still, assuming that the EBITDA margin will gradually revert back to its 7-year normalized average of ~20%, and NORTHM maintains a 70% cash conversion ratio throughout the forecasting period, the FVPS is DKK 88. This also assumes a 5x exit multiple, with cash flows and the terminal value discounted at 10%, but both the revenue and EBITDA margin assumptions seem achievable.

Using an equally-weighted average of the two approaches, I believe NORTHM is worth around DKK 90/share or ~120% above the current share price.

Risk Factors

Accelerated Transition to Digital

An obvious and significant risk is the digitization trend accelerating. While Denmark and Sweden have remained strong markets in terms of demand for the delivery of physical local newspapers and leaflets, this could change over time. And since FKD and SDR constitute 86% of total revenue, this would have a material impact on NORTHM’s performance. I believe the stickiness of physical deliverables will remain quite strong, and even though the transition to digital will continue, the market is likely pricing in a quicker structural decline than what will play out.

Continuing to scale other ventures (e.g., BoligPortal and Bekey) and cutting segment spending as soon as convincing evidence suggests that demand will quickly taper off should help to limit this risk.

Subpar Strategic and Capital Allocation Decisions

As I pointed to earlier, the transfer of Bunck’s shareholding to a foundation could have an adverse impact on share price performance and strategic and capital allocation decisions. While a mission-driven focus and long-term stability will be preserved, activist involvement and takeover bids will likely be limited or blocked. Less pressure from the board could also see management becoming complacent as there will be less pressure to deliver return.

The above is likely framed as overly pessimistic since Bunck’s current goals remain strongly aligned with creating shareholder value. The foundation will also prefer dividends to trimming its stake to cover expenses, making the resumption of dividends likely as the transfer of his holding is completed.

Catalysts

Buybacks and Dividends

Liquidating or trimming the large equity portfolio and funneling proceeds to dividends or buybacks will signal a focus on shareholder value to the market, especially after halting its dividend in March this year. As touched upon earlier, dividends also seem like a preferable choice to cover the foundation’s expenses, and accretive capital allocation should trigger a multiple rerate.

SDR Turning Profitable

If SDR reaches profitability in 2026, as communicated by management, this should add meaningfully to group EBITDA, and consequentially cash flow. There is still execution risk, partially explaining why the market is currently not assigning any value to it.

Monetizing Real Estate

A more speculative potential catalyst is to conduct a sale-leaseback of the currently owned properties. This will free up capital to exploit the significant current mispricing through buybacks, but the likelihood of this is uncertain.

Final Words

NORTHM is a compelling but slightly complex opportunity. Despite lackluster performance last year, and a still-difficult environment for its subsidiaries, management continues to executive on its strategy. The current valuation seems to not only heavily discount short-term earnings volatility, but also extrapolates the subpar performance, assumptions that seem overly pessimistic.

FKD remains highly cash-generative despite a softer market, while the SDR transformation, if successful, could lead to meaningful margin uplift. Additionally, BoligPortal and Dayli’s scalability offers both growth and margin expansion opportunities, with the large equity portfolio and valuable real estate adding to the upside.

There are risks around capital allocation and governance, especially in light of the transfer of Bunck’s majority stake to a foundation, but should NORTHM resume its dividend, initiate buybacks, or deliver on key operational targets (e.g., SDR profitability), investor sentiment could shift meaningfully and trigger a multiple rerate.

With a fair value more than double the current share price, NORTHM offers significant upside potential for those willing to stomach some short-term volatility for cheap, cash-rich exposure to Scandinavian legacy media. Its equity portfolio and real estate holdings limit the downside, while you get the optionality from BoligPortal, Dayli, Bekey, and Karman Connect for free.

This is not investment advice. I hold shares of North Media A/S (NORTHM) at the time of writing, and my views may be biased. Please do your own research and consult a financial advisor before making any investment decisions.