SinterCast: Not a major blow to the long-term outlook - ABG

Revenue back on track, better margins from the next quarter
Programme end-of-life announcement for H2'24, expect revenue dip
Management remains confident in continued growth through 2030

Q2: Good revenue, temporary effects on margin
Q2 revenue came in at SEK 31.7m, up 14% y-o-y, while Engine Equivalents (EE:s) came in at SEK 3.7m, up 3% y-o-y. Revenue increased at a higher rate than EE:s due to a mix of FX effects and higher pricing. Revenue is thus back on track after the Q1 dip. EBIT was SEK 6.3m, up 80% vs. the restated y-o-y figure of SEK 3.5m, for a margin of 20% (13%). Q2 EBIT suffered from an NRI expense connected to the company's participation at the GIFA world foundry trade fair, as well as some double expenses related to the retirement of two employees. These expenses will no longer be present in the coming quarter, and adjusting for these, we estimate Q2 EBIT would have been SEK 8-9m (correction vs. the SEK 9-10m we suggested in our fast-comment).

A programme end-of-life announced, but many opportunities
SinterCast announced that one of its high-volume programmes will reach the end-of-life stage in H2'24, and the company therefore expects a temporary decrease in volume during this period. As a result, the company predicts it will now reach its 5m annualised monthly EE milestone towards the end of 2025. Taking this into account, we reduce '24e-'25e EE:s by 3%, now predicting 3.78m, 4.25m and 4.75m EE:s for the period '23e-'25e. This is however offset by positive FX effects, leading to revenue increases of 2-0%. We make similarly minor changes to EBIT estimates. Management remains confident in its ambition for continued growth through 2030, citing the promising Traton and FAW programmes, and its belief that equipment installations will return to the SEK 8m annual level during '24-'25.

Fair-value SEK 100-160
The share is down 11% YTD and is currently trading at 16-11x '23e-'25e EV/EBIT or 17-11x P/E, with a div. yield of 7-10% in '23e-'25e. We reiterate our fair val....

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