* Weaker Q2 due to natural quarterly variations * Cut '25e-'27e EBIT by 12-13% * Demand intact, rebound expected in Q3 Growth halted, but we expect a rebound in Q3 I-Tech reported weaker Q2 sales of SEK 32m (-39% vs. ABGSCe, -26% y-o-y) and EBIT of SEK 5m (vs. ABGSCe at 16m, -54% y-o-y) for a margin of 15% (24% in Q2'24). The weaker Q2 was mainly due to natural quarterly variations, as the timing of customer orders can shift sales between quarters. We believe the underlying demand is intact, and we expect the company to return to sales growth in Q3 and forecast +11% growth for FY'25e (+20% org., -9% FX). That said, FX will most likely remain a headwind in the near term. The gross margin reached a record 59% (vs. ABGSCe at 56%), and we expect the company to sustain margins around this level going forward. Regarding the EU regulatory process, the next step is the SCBP quarterly meeting in September, followed by a meeting in December. A final decision recommendation is still expected by year-end. Estimates down on Q2, but gross margin raised As a result of a weaker Q2 report, we lower our '25e-'27e sales and EBIT by 9-12% and 12-13%, respectively. However, we raise our gross margin estimates for '25e-'27e by 2-3pp due to the company's continued gross margin-enhancing initiatives. Long-term potential unchanged Despite the weaker Q2, our long-term view of the company is unchanged. We find it promising that it continues to diversify its customer base, with customers other than CMP accounting for 28% of H1'25 sales. PPG, a recent customer addition, grew its off-take by 172% in H1. In addition, the company's new customer signed at start of 2025 is already beginning to scale sales (albeit from a low base). The company is trading at 14x-7x EV/EBIT on '25e-'27e, and 18x-11x P/E, i.e. ~60-40% below the peer median.
LÄS MER
