We have been rather cautious in our '23 outlook previously, as we thought the deteriorating PMIs would have a negative effect on Prevas' demand this year. However, the company seems to be entering 2023 with full pace and no signs of weaker demand. It mentioned that some small segments related to consumer products have seen a decline, but this has been more than offset by increasing demand from the defence, energy, engineering and automotive industries. This information leads us to evaluate our stance, and we increase '23e sales by 3% and EBITA by 18%.
On a journey to become a "quality" company
Prevas wants to be seen as a quality company and after a successful turnaround and two years of delivering in line or better than industry peers, we think it has some merit to the claim now. The relative valuation towards key peers is still intact and Prevas is around 35% below on '23e EV/EBIT. We increase our fair value range to SEK 115-166 to reflect our estimate revisions and the higher multiples in the sector of late.
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