* '25e-'27e sales cut by 6-1% * Market softness persists, delaying customer decisions * Cost-cutting initiatives in place Q2 results Impact Coatings delivered Q2 sales of SEK 6.5m (vs. ABGSCe 11m), with no machine deliveries in the quarter (in line with estimates). Coating Services and Aftermarket sales were SEK 4.4m and 2.1m, respectively (vs. ABGSCe 6m and 5m). During the quarter, cost-cutting measures were implemented. These are expected to lower personnel costs (ex. China) by ~20%, with effects materialising gradually. As a result of lower sales, EBIT was lower at SEK -16m (vs. ABGSCe -12m). In order to secure near-term financing, the company took out a loan of SEK 20m in Q2 connected to its Chinese operations. The company ended the quarter with a cash balance of SEK 30m, which can be compared to the R12m FCF lease adj. of SEK -79m. Estimate changes and outlook We lower '25e-'27e sales by 6-1% but raise '25e-'27e EBIT by SEK 6m, due to the company's improved cost control. The hydrogen market remains sluggish, delaying customer decisions. Nonetheless, Impact continues to see underlying demand, albeit with slower conversion into orders. The company notes gradually increasing Coating Services activity within the hydrogen business area, which it views as a sign that customers are moving stepwise toward investment decisions. Long-term view unchanged Our long-term view of the company is unchanged despite a softer quarter. We believe the substantial investments in the Chinese hydrogen market present a growth opportunity for Impact Coatings. During the quarter the company added new paying customers and received several sampling orders from customers in Europe and North America. The company is currently trading at 3.9x-2.5x '25e-'27e EV/sales vs. peers at 1.0x-0.6x, with current multiples reflecting a company in early-stage development with high growth potential, in our view.
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