Prevas saw Q2 organic growth increase to 3% y-o-y (from 1% in Q1), although this figure was in line with Q1 if adjusted for a positive calendar effect. Sales were SEK 396m (+5% y-o-y) and adj. EBITA was SEK 36m (36m) for an adj. EBITA margin of 9.2% (9.5%). The decline in profitability y-o-y was a bit surprising to us, as Prevas had a positive calendar effect of roughly SEK 5m. The main reason behind the lower profitability was a lower utilisation rate than last year, with Prevas describing the market as still challenging. Looking at specific end-markets, it seems like Life Science and Telecom are the most challenging ones currently, while there is good demand in Energy, Automotive, Defence and Steel & Minerals.
Lower utilisation behind lower profitability
As the Q2 report was below our expectations, especially in terms of profitability, we are lowering our forecast. Sales is adjusted down 1% and adj. EBITA by 10-4% for '24-'26e. We think Prevas will be able to improve profitability throughout the forecast period, as we have seen recent signs of better market conditions, which should provide a tailwind for utilisation rates. We are a bit more cautious for '25e, however, as it contains two fewer working days.
Revised fair value range of SEK 130-186 (134-191)
We adjust our fair value range to reflect our estimate revisions, but think Prevas will continue its positive development in the coming years. One sign of optimism is that the company moved into larger offices in Västerås, Gävle and Örebro in Q2, and with Enmac integrated from Q3 onwards, there are many growth opportunities for Prevas to pursue. The share is still trading 30-35% lower on '24e EV/EBIT compared to key peers.
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