* Strong Q3 across the board * '25e-'27e EBIT down 12-4% on slightly lower Ovzon-3 sales * Good potential for more orders; 35x-14x '25e-'26e EV/EBIT Q3 was a strong quarter There were few things to dislike in Ovzon's Q3 report, including strong financials in terms of sales (+113% y-o-y), margins (27% EBIT margin), and FCF (SEK 194m), chiefly driven by the recent FMV order. This contract began ramping up in Q2 and reached a normalised level by the end of Q3, so a slight sequential tailwind is expected in Q4 as well. However, the initial margins of the contracts have benefited from a large proportion of Ovzon-3-related capacity, which has been progressively transitioned to leased capacity in line with the contract details. Therefore, we expect Q4 margins to decline sequentially, albeit remaining high. Furthermore, this means that Ovzon now has unsold capacity; although the timing of such orders is unclear, we expect more orders in the seasonally busy Q4. We are increasingly expecting an order from another European state, while the situation in the US is less clear. Net financials in Q4 will also benefit from refinancing, which will lower interest rates from ~15% to ~4.5%. Estimate changes While we increase our terminal sales assumptions, we have pushed back the timing of Ovzon-3-related orders, as there have been no recent announcements. This negative product mix leads us to lower '25e-'27e EBIT by 12-4%. Positive momentum continues Ovzon remains a unique company in the Nordics within the structurally expanding SATCOM market. Our conviction in its market position has been reinforced following the SEK 1bn FMV-related order, and there is good potential for additional proprietary satellite launches, which we have not included in our forecasts. We forecast 2026 EBIT of SEK 269m (up from SEK 113m in 2025), coupled with FCF of SEK 344m. This equates to 14x '26e EV/EBIT and a 9% FCF yield.
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