* Q3e: +29% organic growth, EBIT SEK 17m (11m)
* '27e-'28e adj. EBIT raised by 6-8% on FX
* EU vote ahead; '27e/'28e EV/EBIT of 6x/4x, ~60-80% below peers
Q3 expectations
We estimate Q3 sales of SEK 54m, +31% y-o-y (+29% org., +2% FX). We expect growth to slow from the record Q2 (+91% org.) on tougher comps, but to remain solid, driven by CMP (+35% org. in H1), the recovery of the second-largest customer, which cut its offtake last year due to financial constraints, and continued growth among smaller customers such as PPG and Jotun. FX turns into a slight tailwind for the first time in five quarters in Q3 (+2%). We forecast EBIT of SEK 17m (11m), for a 31% (27%) margin.
Estimate changes and outlook
We raise '26e/'27e/'28e adj. EBIT by 1%/6%/8%, mainly on FX, as sales are predominantly USD-denominated while opex is largely SEK-based. We will listen for an update on the newly acquired antifouling technology for aquaculture net coatings, where management sees commercial sales a few years out. Given the early stage and limited information on its potential, we have not included it in our estimates. With SEK 165m in net cash, the balance sheet remains strong.
Waiting for the EU decision
The key event is the SCBP vote on the Commission’s proposed non-renewal of medetomidine, which management sees as most likely at the December meeting or by written procedure. The current approval expires on 31 December. In a negative outcome, I-Tech is prepared to appeal, and the direct impact would be limited, as Europe accounts for 2-4% of sales. Meanwhile, higher charter rates and fuel prices underline the value of premium antifouling, and Selektope is still only on ~3,500 of ~110,000 commercial vessels. The company is trading at ‘26e/'27e/'28e EV/EBIT of 10x/6x/4x, i.e. ~60-80% below peers.