Ovzon: Lowered estimates following the Ovzon-3 delay - ABG

We cut '24e-'25e sales by 32-8% due to the Ovzon-3 delay
We now expect Ovzon-3 to generate sales as of Q3'24e
Q2e preview: sequential progress on the back of new orders
New anticipated launch window is Q4'23-Q1'24

On 22 June, Ovzon announced another delay to the launch of its proprietary satellite, Ovzon-3. While we understand that the project has been in its final stage for some time, the remaining steps have been taking longer than previously anticipated, partly as a result of Ovzon's decision to change its launch partner from Arianespace to SpaceX in Feb'23. Ovzon now anticipates the launch to occur "no earlier than late 2023 or early 2024" (previous guidance was Q3'23). Although we had not included any Ovzon-3-related revenues into our 2023 forecasts, we consequently push our Ovzon-3 sales forecasts by two quarters to Q3'24e, which leads us to cut '24e-'25e sales by 32-8%. While management continues to be as transparent as possible, our visibility on when Ovzon-3 will reach orbit is low. We make small changes to our opex assumptions, but lift our interest rates forecasts, as we expect the delay in revenues related to Ovzon-3 will mean that it takes Ovzon longer to deleverage its debt. On our new estimates, Ovzon will end Q4'23 with cash of SEK 95m (NIBD SEK 374m).

Solid Q2e on the cards
While the delay of Ovzon-3 and the situation with its previous partner have been headaches, we argue that Ovzon has taken several steps forward in recent years, including a broadened customer base and increased revenues (after the trough in 2021). On the back of recent order announcements, we expect Q2e to present sequential progress, where we see sales of SEK 87m (vs. SEK 57m in Q1).

Implied valuation
Following the upcoming launch of Ovzon-3, we expect sales to ramp up in the coming years. On our new estimates, the share is trading at 5x '25e EV/EBIT.

Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ovzon/equity-research/2023/8/ovzon---lowered-estimates-following-the-ovzon-3-delay/