Inission: Underlying momentum in focus - Nordea

Inission's Q3 report was soft, as expected, with a 10% sales decline y/y and an 11% drop in adjusted EBIT, although the latter was 17% above our expectation. The y/y decline was driven by component shortages and tough comps from last year. That said, underlying momentum remains good with increased order intake and adjusted 18% y/y organic sales growth. We make only minor sales revisions but lift adjusted EBIT by 1-7% for 2021E- 22E. Inission is currently trading at a 2022E FCF yield of 8% with net debt/EBITDA of 0.4x 2022E. This represents a 2022E P/E of 14x and a 2022E adjusted EV/EBIT of 10x, versus 13x and 11x for peers, respectively. We narrow our DCF-based fair value range to SEK 33-43 (33-45); the lower end represents a 10.9% WACC (upper end: 8.9%) and a 0.8 pp drop in the already muted EBIT margin. Marketing material commissioned by Inission.

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