18% revenue growth y-o-y

EBIT forecast down 3-5%

FCF yield at 5% in ’18e – peers at 2%

Q3: production numbers affected by Tupy shipments
Sales were SEK 19.7m in the quarter, which corresponds to 18% growth y-o-y but was 9% below our forecast. EBIT was SEK 6.0m, which was 20% lower than our estimate, while EPS was 5% below our estimate at SEK 1.00. The deviation was due to lower production numbers than we had forecasted, where a delay of shipments from the new Tupy high volume programme (300k on annualised basis) impacted negatively. This is going to start in Q4, however, meaning that it will not affect our forecast. Engine equivalents were 2.30m on an annualised basis, compared with our estimate of 2.65m. Sampling cups were 42,800, compared with our estimate of 45,000.

Estimate revisions undramatic – FX takes off 2%
SinterCast’s production numbers tend to vary over quarters, so we are cautious on extrapolating from these individual results. Hence, while the deviation to our numbers looks dramatic, we are keeping our underlying estimates intact. Therefore, EBIT in ’18e is down by 5% along with the results in this quarter. The effects on ’19e and ’20e are rather limited, at -1% in underlying changes and another -2% in FX.

FCF yield at 5-6% in ’18-’20e
SinterCast is trading at EV/EBIT ’19e of 15.6x, while the average in our small cap peer group is 12.8x. A FCF yield of 5% is expected for the year, compared with an average of 2% for the peer group. The dividend yield is 6%, while it is 2% for the peer group.

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