Inission: Not yet out of the woods - Nordea

We expect a decent Q1 with sales up 27% y/y, but adjusted EBIT down 20%, from a low base. We forecast a Q1 margin of 2.2%, down 1.3 pp y/y, based on higher costs for input materials and a lag in mitigating price hikes. As a result, we lower 2022E adjusted EBIT by 9% but leave 2023-24 largely intact. Longer term, we see growth potential from the re-shoring trend, operational efficiencies and M&A. We forecast a 10% sales CAGR in 2021-24 with an EBIT margin of 6.8% in 2024, versus 4.9% in 2022, with M&A headroom capable of adding 23% to our 2022 EBITA estimates. We update our DCF-based fair value range to SEK 30-39 (27-39). The lower end represents a 11.7% WACC (upper end: 10.2%), and a 0.5x pp drop in the EBIT margin. Inission is currently trading at a 2023E P/E of 9.4x and a 2023E EV/EBIT of 7.8x, versus 12x and 11x for peers, respectively. Marketing material commissioned by Inission.

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