Freemelt: Q3e in line with Q2 - ABG

Q3 report due on Wednesday, 9 November


We expect results to largely mirror Q2


Worrisome if additional capital is not secured during Q4


We expect revenues in line with Q2

As the Q3 report approaches, we leave our sales and EBIT estimates unchanged at SEK 5.5m and -14m, respectively. During the quarter, Freemelt received one additional order for a Freemelt ONE machine, and based on its order history, we expect two previously ordered machines to have been delivered. We assume a unit cost of 3.5m and a 40%/60% order/delivery payment split, but the payment plan differs from order to order, so this is only an approximate calculation. Our estimates assume continued investment in the development of the company’s industrial printer, which results in the negative EBIT.


Long-term outlook unchanged

As nothing substantial has changed during the quarter, we leave our ‘22e-‘24e estimates largely unchanged. We do not expect the company to start selling industrial printers until 2024, and considering Freemelt’s current customer group mainly comprises universities, we do not expect the economic downturn to significantly affect sales, as university investments should be less cyclical than industrial capital expenditures. EPS is adjusted up by 3% as a result of a lower share price assumption for an expected share issue.


FV unchanged, assuming additional capital is raised

We maintain our fair value range of SEK 9-21, but note that this range is dependent on Freemelt securing additional capital in Q4’22 or early Q1’23, as we expect the company to run out of cash in Q1’23e otherwise. Management has provided no guidance on whether the company will be successful in raising new capital.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/Freemelt/Equity-research/2022/10/freemelt---q3e-in-line-with-q2/