Cavotec: Short-term caution clouding momentum - ABG

* Report out on 7 November* Q3e sales of EUR 40m (44m), EBIT EUR 2.3m (3m)* Customer hesitancy likely to persist in the near-termQ3 expectationsFor Q3 we estimate sales of EUR 40m (-10% y-o-y, +11% q-o-q) and order intake of EUR 38m (+5% y-o-y). We expect the customer caution observed in Q2 due to ongoing global uncertainty to continue to weigh on Cavotec in the near term. We expect this to primarily affect Cavotec’s products and services with shorter lead times, which we expect will result in softer sales in the quarter. For P&M, we estimate sales of EUR 24m (-13% y-o-y) and for Industry, sales of EUR 15m (-6% y-o-y). Moreover, we expect Cavotec to continue facing slightly elevated costs, primarily related to the large shore power orders placed in Q4'24, which we anticipate will be delivered mainly in Q4'25e and early 2026e. As deliveries tied to these orders progress, we expect sales momentum to strengthen towards the end of 2025e. On EBIT, we estimate EUR 2.3m (3m) for a margin of 5.8% (6.8%).Estimate changes and outlookWe lower '25e-'27e sales by 3-1% and total '25e-'27e EBIT by EUR 4m, as we take a more cautious view on both near-term demand, given customer hesitancy, and the expected trajectory of profitability improvement. However, we continue to believe that shore power orders should gather pace due to regulatory drivers. This month, the company announced orders worth a total of EUR 9.4m for shore power systems, corresponding to ~7% of the Group's Q2'25 backlog and ~2% of cumulative '25e-'27e sales.Long-term view unchangedWhile our positive view of Cavotec's long-term outlook remains unchanged, we believe the company’s near-term focus will be on driving volume growth, which we consider essential for the company to reach its financial targets. The share is trading at 25x-11x EV/EBIT in '25e-'27e vs. peers at 17x-11x.