Inission: Continued outperformance - ABG

20% organic growth, 7.3% EBITA margin, 8% margin in Enedo
Order intake still strong, investing to execute on order book
7-9% EBITA upgrades, trading in line with peers, FV SEK 50-70

Q2: Very strong 8% EBITA margin in Enedo
Q2 was another strong quarter for Inission, with sales of SEK 562m, growing 20% organically y-o-y, as both the Inission and Enedo segments executed on the strong order book. EBITA was SEK 41m (17m), for a margin of 7.3% (4.9%). The strong margin was driven by a solid 7.0% margin in Inission, and an excellent 8.4% margin in Enedo. Inission's EBITA faced FX headwinds of SEK 5m, while the strong margin in Enedo was achieved via good throughput in the Tunis factory and price increases. This is further evidence that management's turnaround effort in Enedo has been successful. Net income was SEK 25m (9m), i.e. a margin of 4.5% (2.5%), which converted into lease adj. FCF of SEK 22m (-51m).

Restrained EBITA upgrade on strong Enedo margin
Following the Q2 numbers, we increase '23e-'25e sales by 1%. While the Enedo margin improvement is a good sign, and management insists it was not due to any particular one-off effect, they emphasise that Enedo is still in a state of change, and that the road to consistent improved margins may be bumpy. We therefore do not extrapolate the improvement fully, but still raise our '23e Enedo margin from 4.3% to 5.7%. This means we increase '23e-'25e EBITA by 7-9%. The outlook for the company remains good, with management stating that the order situation is still strong, and that they are so far not noticing any reticence among customers. Component shortages are no longer much of an issue, as the current bottleneck is instead caused by factories operating at full capacity. Investments into additional personnel are being made to meet the demand.

Trading in line with peers, fair value SEK 50-70
The share is currently trading at 11x '23e EV/EBITA and 14x '23e P/E, vs. peers at 11x and 13x, respectively. We reiterate o....

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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/inission/Equity-research/2023/8/inission---continued-outperformance/