Nilörn: Solid orders and organic growth - ABG

* Organic growth of 5% offset by FX headwinds* Minor negative revisions on '25e-'27e EBIT* NTM EV/EBIT slightly above 7xWhat to look for in Q3'25In Q3'25 we expect positive organic growth of 5%, which implies sales of SEK 203m and adj. EBIT of ~SEK 19m, corresponding to a margin of 9.3%. Our updated Q3 estimates therefore imply a minor negative estimate revision of -0.4% to Q3 sales, mainly on updated FX. EBIT is also slightly lowered, as we now expect slightly higher opex. We expect Nilörn's order intake to be within the range of ~SEK 210-230m. While this is slightly below Nilörn's average order intake on an LTM basis, it is ~15% above the historical average of ~SEK 190m.Minor estimate changesWe have cut our '25e-'27e EBIT by 4-1%. Our changes to '25e adj. EBIT are due to a slight increase in opex, given the recent trajectory. The changes to '26e-'27e sales primarily follow updated FX movements. Readers should note that an FX drag has a negative impact on sales, but a positive impact on gross margins and the opex base. We continue to be optimistic about the long-term prospects of the investments in Bangladesh and the efforts in Sri Lanka, and we believe that the Bangladesh factory will support increased margins once it is up and running. However, we deem it likely that we will not see the full effects from the new factory until 2027. Nilörn has an EBIT margin target of >10%, which we believe will be achieved by '27e. We maintain our positive view of the company and believe that it can generate a >20% incremental return on invested capital in the coming years.ValuationOur new estimates imply that Nilörn is trading slightly above 7x NTM EV/EBIT. We also note that the company is trading at an NTM EV/EBIT level that is approximately 20% below the corresponding five-year median.