In terms of sales and EBIT, Q3 was in line with our estimates. However, the positive surprise was the order intake, which grew by over 40% y-o-y. Adjusting for a packaging order that typically comes in Q4, the order intake growth was a little over 30%. The gross margin of 48% was the highest recorded quarterly gross margin in a decade. While we do not extrapolate the strong gross margin, we are nevertheless impressed by the strong performance despite the cyberattack.
Adj. EBIT estimates up 2-1%
We raise '25e-'26e sales by 2-1% and '24e-'26e adj. EBIT by 2-1% on the back of the report. Nilörn's sports & outdoor clients are returning to more normalised volumes, and that is evidenced by the significant order intake growth y-o-y. While the luxury client segment is relatively weaker, it is still growing, albeit at a slower pace. Nilörn continues to surprise positively on the gross margin, suggesting that the company's sourcing capabilities can offset incremental price increases to a greater degree than we have thought. However, we do not yet extrapolate this into the numbers because of quarterly volatility. Finally, we continue to maintain our positive view of the company's long-term operating prospects, and expect Nilörn to return to an ROIC in the 25% range in the coming year.
Valuation
Our new estimates imply that Nilörn is trading at an NTM EV/EBIT of ~8x, which is ~15% below the 10-year average and ~40% below peers.
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