The global geopolitical situation affected Boule's Q2. Sales were SEK 140.5m (-3% vs. ABGSCe at SEK 145.3m) for 0% growth vs. Q2'22, but -9% organically. Boule sees headwinds coming from clients trimming inventories due to weak local currencies, limiting short-term investments. This is also affecting deliveries to some regions (Middle East/Africa), with some clients not being able to pay due to local bank restrictions (Boule requires prepayment for delivery). Although the orders remain active it is uncertain if this will be solved in Q3 or if issues will persist. The gross margin (GM) was 42.7%, -3.5pp vs. ABGSCe at 46.2%, due to an unfavourable product mix. Opex was SEK 51.2m, in line with ABGSCe at SEK 50m. This yielded an EBIT of SEK 8.7m (-49% vs. ABGSCe). Boule has decided to make some improvements to the new 5-part system, pushing filings to Q3 '24 (H2 '23). The first sales are now expected in '25e (Q4'24).
Estimate changes
We see the geopolitical issues compromising sales, and the unfavourable product mix continuing to pressure the GM. We therefore cut our GM to 43.7-44.5% (46.2-46.5%) for '23e-'24e, trimming our expected EBIT by 34-33%. We also cut our expected nr. of instruments sold for '23e-'25e (esp. during '25e), where we believe that the new delay in the 5-part instrument could push the start of the sales well into that year. Revenues should be partly offset by a higher instrument avg. selling price, however.
Share trading at a '23e EV/EBIT of 11.7x
The geopolitical situation and the market trend to switch to 5-part systems is compromising the share in the short-to-mid term. Although now delayed, we see the launch of the new instrument as the next material milestone for Boule, which is trading at a '23e EV/EBIT of 11.7x on our new ests (2y historical avg. at 12.2x).
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