Sales growth of 46.3% y-o-y, for SEK 137m

Estimates updated with USMC tender offer

EV/EBIT of 29x-21x for ‘19e-‘20e, in line with NTM avg.

EBIT of SEK 39m, margin 28.3%, 1.7pp below ABGSCe
Invisio’s Q2’19 report was strong, with sales amounting to SEK 137m, or 0.9% above our estimate of SEK 136m. Sales were driven by the delivery of what we suspect was a large part (80%+) of the SEK 111m order received from a new client within the US DoD in April. Approximately 94.8% of net sales, or SEK 130m, was attributable to the US market, where Invisio sells direct without partners. This contributed to a strong gross margin of 63.5%, which compares with the 12-month rolling average of 58%. EBIT was SEK 39m, for a margin of 28.3%. This was 4.7% below our estimate of SEK 41m, and a margin of 30.3%, mainly due to higher opex, which was attributable to costs for external testing of Invisio’s new products, along with the hiring of new sales and marketing personnel.

USMC tender offer set to pay off over the next couple years
As we previously reported, Invisio has won a public procurement from the US Marine Corps (USMC). The procurement refers to advanced communication equipment with hearing protection for between 7,000 and 65,000 marines, and Invisio has received an initial order of SEK 43m. The total order value is not known yet, but if we assume that Invisio charges between SEK 5,000 and SEK 10,000 per unit, it could amount to SEK 650m in total. The total order value will likely depend on the size of the USMC’s new budget, which will be revealed in November.

EV/EBIT 29.1x-17.1x for ‘19e-‘21e
At the current share price, and based on our updated estimates, Invisio is trading at an EV/EBIT of 29.1x-21.0x for ‘19e-‘20e, which can be compared to the five-year average NTM EV/EBIT of 24.5x, based on FactSet consensus.

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