Decommissioning is running on full steam

Positive estimate revisions, ‘22e EBIT up ~4%

Share trading at P/E 10.1x on our revised ’22e

Q2: Sales up 20% y-o-y, adj. EBIT margin 8.6% (5.7%)
Studsvik reported Q2 net sales of SEK 201m (168m), 12% ahead of our estimate. The deviation was mainly driven by the Decommissioning division, where sales were up 37% y-o-y following strong demand and also because the yearly revision period started earlier this year than it did 2020. For the other divisions, Fuel & Material Technology (F&MT) was slightly ahead, Scandpower slightly behind and Waste Management lagged our forecast. Long term, we think it is most important that the ramp-up in F&MT from the large orders from China, South Korea and Russia is going according to plan. Adj. EBIT was SEK 17.3m (9.6m), beating our estimate by SEK 5.2m. Again, the deviation was entirely driven by Decommissioning whereas the other divisions were slightly behind our forecast. Capex reached SEK 12.4m (4.7m) in Q2 driven by higher investments in F&MT, and Studsvik ended Q2 with a cash position of SEK 86.9m.

Estimates up on higher Decommissioning sales and margin
Higher sales and margin assumptions for the Decommissioning business are the main drivers for our positive estimate revisions. Otherwise, we make slight negative adjustments for Scandpower and decrease our sales and EBIT assumptions for Waste Management, as confidence in the new license agreement is fading. We keep F&MT estimates relatively intact, however, and increase our capex assumptions for the coming two years for the F&MT division. In total, it results in ~2% sales increases for ‘21e-‘23e and 6%-3% EBIT increases for ‘21e-‘23e.

F&MT adds another agreement, large order backlog
In terms of new orders, Studsvik communicated that F&MT had won another contract with OECD NEA worth SEK 110m over 5 years. Within Decommissioning, the company signed an agreement in Germany worth SEK 135m over 3 years that will secure a smooth transition following
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