Inission: Diversified EMS players going strong - ABG

EMS industry thriving on strong demand, fading shortages
Expect continued growth in Q1e: sales SEK 517m, EBITA 28m
13x '23e P/E vs. peers at 16x, fair value SEK 50-70

Q1e: expect continued strong performance

In Q1e we expect sales of SEK 517m, with Inission growing 15% organically and Enedo contributing SEK 130m. Demand seems to remain strong among the diversified EMS providers, with Note reporting a strong Q1 and both Hanza and Scanfil issuing guidance upgrades, and we think the same will apply to Inission. For EBITA, we estimate SEK 28m, i.e. a margin of 5.5% (Inission: 6.3%, Enedo: 3.0%). We expect this will result in SEK 15m in net income, i.e. a margin of 3.0%. For lease-adjusted FCF we estimate only SEK 16m, as a potential WC release is more likely to occur in H2'23e when the EMS-providers think component shortages will have faded, and modernising the Tunis factory will require some extra capex in the near term (although we do not know which quarters will be hit with the extra capex).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/inission/Equity-research/2023/4/inission---diversified-ems-players-going-strong/