Inission: A soft Q3, but recovery on the cards for next year - Nordea

Inission will report its Q3 numbers on 11 November. We expect a soft report with sales down 11% y/y and EBIT down 24%, as operations are still hampered by component shortages, causing delays and turbulence throughout the supply chain. We believe volumes, pricing, and efficiency will improve in early 2022; we forecast 45% EBIT growth y/y for next year. We lower 2021E-23E sales by 1-3%. We lower adjusted EBIT by 18% for 2021E and by 6% for 2022E, but raise 2023E by 1%. Inission is currently trading at a 2022E FCF yield of 7.3% with a net debt/EBITDA of 0.8x 2022E. This represents a 2022E P/E of 15x and a 2022E adjusted EV/EBIT of almost 11x, versus peers at 18x and 13x, respectively. We raise our DCF-based fair value range to SEK 33-45 (32-44); the lower end represents a 10.9% WACC (upper end: 8.9%) and a 1.5% drop to the already muted EBIT margin. Marketing material commissioned by Inission.

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