Sales of SEK 65m, +13% vs. ABGSCe…

…but reduced estimates as IS-39-related orders lacking

2022 estimates largely unchanged

Sales and EBIT well above ABGSCe
Ovzon reported sales of SEK 65m, up 24% y-o-y, and 13% above our forecast of SEK 58m. The higher sales, in combination with slightly higher gross margins and significantly lower D&A (SEK -0.2m vs. ABGSCe SEK -2.5m) resulted in EBIT of SEK 13.7m. Our forecast was EBIT of SEK 1.2m. Cash flow from investments was SEK -200m. This was in line with Q3 numbers, and stems from Ovzon continuing to invest heavily in its recently initiated Ovzon-3 project. Cash by the end of 2019 amounted to SEK 257m. However, on 29 January, Ovzon announced a directed share issue that will contribute with an additional SEK 84.5m (pre costs) to its balance sheet. This action will support further development costs in addition to adding another institutional owner, Stena, to its shareholder base.

Reduced 2020e sales on new capacity uncertainties
In its Q4 report, Ovzon says that sales in H2’20 might be burdened in that Ovzon has not yet received new leased capacity from the IS-39 satellite. Although IS-39 has successfully been launched and is in service, it is currently unable to supply Ovzon with capacity due to regulatory considerations. We believe that the situation will be resolved in due time, but have pencilled lower sales assumptions into our forecasts because of this. Therefore, we reduce our 2020 sales forecast by 27%. Because Ovzon has a scalable business model, the corresponding EBIT cut is 64%. However, we wish to highlight that the revisions appear small in relation to the sales and EBIT numbers that we forecast Ovzon to report in 2022.

4.2x EV/EBIT and 24% FCF yield on 2022e
We keep our Ovzon-3 estimates intact after the Q4 report. We estimate that the proprietary Ovzon-3 satellite will generate sales of SEK 700m p.a., and with high EBIT margins. At current levels, Ovzon trades at 4.2x 2022e adj. EV/EBIT.

info@introduce.se (Introduce.se)

ABG Sundal Collier - Introduce.se