Ovzon: Q1e headache to ease in Q2e - ABG

Another bad debt provision likely to hurt Q1e, easing in Q2e
We cut '23e sales by 8% and '24-'25e by 2%
Share is now trading at 5x '25e EV/EBIT


Q1 expectations

Ovzon's momentum has been strong recently, partly driven by the recent geopolitical situation and the subsequent rise in demand for complementary services to terrestrial networks. Although Q4 ended on a record-high note, we expect a sequential slowdown in Q1e amid fewer announced orders and the current situation with its Italian partner. On the latter, Ovzon has said that it seeks to continue delivering its services (due to the fact that the Italian Fire and Rescue Services performs a societal critical function) despite the recent issues with payments. Because of this, we think that there is a risk of more provisions in Q1e, but instead of including such items into our forecast, we have excluded all Q1e-related sales from this end customer (~SEK 22m). As such, we look for Q1e sales of SEK 66m (-34% y-o-y, partly on tough comps), coupled with gross profit of SEK 14m and EBIT of SEK -33m (vs. SEK -18m in Q1'22).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ovzon/equity-research/2023/4/ovzon---q1e-headache-to-ease-in-q2e/