Invisio: Two big order announcements - ABG

- SEK 465m in two orders for Intercom and Vehicle radios...
- ...represent 35% of cons 2024e order intake, with deliveries in Q2-Q4
- De-risks 2024e sales growth and could add ~20-30% to cons 2024e EBIT

Largest Intercom order to date
This afternoon, INVISIO announced two large orders totalling an order value of SEK 465m, to a European customer. The first order is the largest Intercom order INVISIO has received, and is a good proof for the product in our view. The Intercom system is an in-vehicle technology that bridges the personal communication system with the vehicle communication platform. The Intercom order is at SEK 230m. The second order is for Vehicle radios where INVISIO is a prime contractor for a third party solution, and will also provide installation and training. A large part of the deliveries involves INVISIO acting as a prime contractor and receiving a service margin (less than 10% gross margin). All in all, the two orders further strengthen our view that INVISIO entails a strong market position for communication products in extreme situations and is a preferred supplier to large military organisations.

De-risks 2024e sales and order estimates
The total order value of SEK 465m represents 35% of FactSet consensus order intake for FY 2024 and 152% of Q1 order intake, s showing the large size. As deliveries are expected between Q2-Q4'24, it also de-risks consensus sales estimates which are at SEK 1.4bn in 2024, for a growth of 15% y-o-y.

Could add 20-30% to 2024e EBIT
We do not know profitability on the orders, but if we assume a group gross margin (~60%) on the Intercom order and 10% on the Vehicle radio order, with good conversion to EBIT (80-90%), it would mean SEK 130-140m in EBIT, or 43-46% of consensus 2024 EBIT estimate. Large orders are already likely in expectations, but not to this extent in our view, meaning that it could add some 20-30% on consensus 2024 EBIT estimates, but no impact beyond (except improved likelihood for similar orders). The share currently trades at 30.8x NTM EV/EBIT, which is 19% below its 5-year average.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/invisio/Equity-research/2024/3/invisio---two-big-order-announcements/