We estimate that Invisio will deliver a solid report for Q4, the seasonally largest quarter, with 22% organic growth driven by the high order book as of Q3. Although it includes more Racal orders, with an estimated longer delivery time than Invisio products, we still expect a solid order conversion to drive sales growth. Invisio has not announced any orders in H2'23, in contrast to our expectation of larger order announcements. The reason is likely that Invisio has had a harder time reaching its order threshold of 10% of sales to announce it, as sales are up 61% in 2023e. This means that customers are not placing larger orders, but we understand that the flow of medium-sized orders has been solid, as Invisio commented on in its Q3 report. For Q4, we estimate sales of SEK 356m, EBIT of SEK 81m (22.7% margin), up 35% y-o-y and 8% above FactSet cons.
Estimate cuts on FX
With a high share of USD and EUR exposure, we reduce our sales estimates by 2% for 2024e-25e, which scales on opex, and makes us reduce 2024e-25e EBIT by 6%. We continue to estimate that Invisio can grow 15% organically in the years to come.
Comments on demand and customer inventory are of interest
Invisio, and other military-related suppliers, have had strong years in 2022-23 from increased demand, and we expect to see further solid demand from a general trend of increased military budgets for many NATO countries ahead. However, we are looking carefully for comments about potential excess demand from customers or tendencies towards inventory build-up, as one can think of stressed buyers in 2022-23 wanting to fill up military storage ahead of expected budget increases. We have not seen such comments in the market yet. The share is currently trading at 32x 2024e EV/EBIT, where we estimate 15% organic growth.
