Sales were SEK 27.9m (in line with prel. figure and ABGSCe), gross profit was SEK 20.8m (-1% vs. ABGSCe 20.9m), and adj. EBIT was SEK 10.4m (+38% vs. ABGSCe 7.5m), for a margin of 37.3% (ABGSCe 27.0%). This included an NRI of SEK -4.9m (ABGSCe -4.5m) from the termination of a deferred purchase agreement. Net profit was SEK 6.4m (ABGSCe 4.2m). While gross profit was in line with our expectations, the company managed to maintain a slimmer opex base than expected (ex. NRIs). Also, Q2 marked the start of production of a new model in the FAW foundry in China, somewhat delayed due to travelling restrictions.
Estimate changes and outlook The isolated Q2 figures would imply 7-4% EBIT upgrades for ’22e-’24e. The company says semiconductor supply issues among its customers are improving and did not significantly affect the quarter. The pipeline for equipment sales in H2 is mostly empty (save for one Ladle Tracker installation), but series production volumes from installations in H2'21 will continue ramping up. Moreover, the production targets of reaching 4.0m engine equivalents during 2022 and 5.0m during 2024 were reiterated.
Final thoughts and valuation In our view, the H2’21 installations have built a solid base for revenue growth in ’22, despite the fact that it will be a softer year for new installations. This should continue in H2, both with volumes ramping up in the new Scania foundry and in the FAW foundry. Finally, on our pre-Q2 estimates, the share trades at 22x ’22e EV/EBIT, offering 5-8% dividend yield for ’22e-’24e.
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