Ovzon: Small steps forward - ABG

Sequential improvements, but Q2 was below ABGSCe
We lower our Ovzon-3 utilisation assumptions for '25e
Ovzon-3 launch window was reiterated: Q4'23-Q1'24


Ovzon-3 has reached its final stage

On the back of recent order announcements, Q2 sales of SEK 69m improved well from Q1 at SEK 57m, albeit came in below our forecast of SEK 87m, partly due to longer lead times on orders than expected. Ovzon maintained its guidance of "flat 2023 sales versus 2022", which in combination with a seasonally strong H2 and the USD 11m order backlog bodes well for improved revenue growth in H2. As the lion's share of Ovzon's COGS comprises fixed leased capacity agreements, the gross margin remained subdued at 19%, down from 31% in Q2'22 when sales were higher. That said, we expect the metric to expand in the coming quarters on the improved sales. EBIT was SEK -28m due to the negative organic growth together with higher opex on increased sales activities. We believe that the Ovzon-3 delay could have hurt some of its recent sales activities, although this should revert in 2024 as the satellite reaches orbit. The previously communicated Ovzon-3 launch date was reiterated: Q4'23-Q1'24. Although capex of SEK 230m was above our expectations (accumulated capitalised costs SEK 1.8bn), most Ovzon-3 related capex has now been taken.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ovzon/equity-research/2023/8/ovzon---small-steps-forward/