Invisio: Ready for delivery season - ABG

Delayed deliveries in Q2 but record-high order book Sales -1-2% and higher opex cut EBIT by 9-37% Share at 7x EV/sales and 35x EV/adj. EBITDA 2023e Slightly weaker than expected, but good outlook

While recent geopolitical events could well lift demand for Invisio’s services (given its defence niche), long lead times mean that there is a delay until such tailwinds show in terms of increased sales and orders. Q2 sales were SEK 154m, flat y-o-y and -4% vs. ABGSCe. Although orders fell 6% y-o-y (-12% vs. ABGSCe), we calculate an underlying order intake growth of +11% y-o-y (i.e., excluding announced orders). Due to the sales miss, EBIT of SEK 8m was below our forecast of SEK 6m. That said, we note that this included NRIs of SEK 5m, mainly relating to the integration of Racal. Adjusting for this, opex grew 22% y-o-y, mainly driven by increased marketing activities (trade fairs, etc.), which we think is a smart move given the gradually increasing interest in defence solutions amid the recent geopolitical turmoil.

Estimates down 1-2% on sales, more on EBIT Invisio’s deliveries continue to suffer from supply chain disturbances, which resulted in a record-high backlog of SEK 482m in Q2 (+151% y-o-y). While the timing is uncertain, we expect the situation to gradually improve from here, which in turn paves the way for higher sales. We trim our sales estimates slightly following the Q2 report (-1-2% on ’22e-‘24e), while our ‘22e-‘24e EBIT estimates are cut by 9-37% on raised opex estimates.

Share at 7x EV/sales and 35x EV/adj. EBITDA 2023e Although the sales growth has been lower recently, we believe the business is delayed rather than lost. The share is trading at 7x 2023e EV/sales, which is slightly lower than the 5-year average of 8x, while the 2023e EV/adj. EBITDA of 35x is slight above the 5-year average of 29x.

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