Ovzon: Strong Q2, but some revenue slippage - ABG
This is a third party research report and does not necessarily reflect our views or values
- Sales +148% y-o-y on recent orders, but -16% ABG/cons
- Lower-than-expected Q2 terminal sales to come back in H2
- Expect cons to raise '25e EBIT by 5%
Q2 results
Sales SEK 166m (-16% vs ABG 197m and -15% vs cons 196m), EBITDA 63m (-10% vs ABG 70m and -5% vs cons 67m), EBIT 27m (-21% vs ABG 34m and -13% vs cons 31m). As expected, NWC normalised, resulting in FCF of SEK -93m (vs. SEK -41m in Q2'24). Net debt totaled SEK 587m by end-of-Q2. The order book was SEK 1.2bn by end-of-Q2, and Ovzon has also signed another SEK 72m contract in Q3.
Q2 thoughts
Following the SEK 1bn order from the Swedish FMV, Ovzon has achieved a significant breakthrough in Q2. Sales improved markedly and EBIT reached positive territory for the first time since Q1'20, despite the significant D&A drag resulting from the launch of the company's proprietary satellite, Ovzon-3, in 2024. Still, Q2 sales were below our forecast, entirely stemming from lower terminal sales (SEK 53m in Q2, vs. our forecast SEK 85m), which we deem to timing effects (i.e. this should revert in H2). SATCOM sales were in line with our forecast. On the outlook, Ovzon says that demand remains strong, but that temporary uncertainty remains in the US, for why the US DoD has not renewed the 12m contract signed in Aug'24 (unexpected).
Estimate changes
We expect consensus to raise '25e EBIT by ~5%. The stock is trading at 34x-16x '25e-'26e EV/EBIT on our unrevised estimates.
- Lower-than-expected Q2 terminal sales to come back in H2
- Expect cons to raise '25e EBIT by 5%
Q2 results
Sales SEK 166m (-16% vs ABG 197m and -15% vs cons 196m), EBITDA 63m (-10% vs ABG 70m and -5% vs cons 67m), EBIT 27m (-21% vs ABG 34m and -13% vs cons 31m). As expected, NWC normalised, resulting in FCF of SEK -93m (vs. SEK -41m in Q2'24). Net debt totaled SEK 587m by end-of-Q2. The order book was SEK 1.2bn by end-of-Q2, and Ovzon has also signed another SEK 72m contract in Q3.
Q2 thoughts
Following the SEK 1bn order from the Swedish FMV, Ovzon has achieved a significant breakthrough in Q2. Sales improved markedly and EBIT reached positive territory for the first time since Q1'20, despite the significant D&A drag resulting from the launch of the company's proprietary satellite, Ovzon-3, in 2024. Still, Q2 sales were below our forecast, entirely stemming from lower terminal sales (SEK 53m in Q2, vs. our forecast SEK 85m), which we deem to timing effects (i.e. this should revert in H2). SATCOM sales were in line with our forecast. On the outlook, Ovzon says that demand remains strong, but that temporary uncertainty remains in the US, for why the US DoD has not renewed the 12m contract signed in Aug'24 (unexpected).
Estimate changes
We expect consensus to raise '25e EBIT by ~5%. The stock is trading at 34x-16x '25e-'26e EV/EBIT on our unrevised estimates.