INVISIO - Estimate miss as COVID-19 delay orders

Q4 EBIT of SEK 40m, -44% vs. ABGSCe, -41% vs. cons Could see negative cons. ‘21e EBIT revisions of 5-7% H1’21e likely to face continued COVID-19 pressures Q4’20 details Invisio reported its Q4’20 figures today where reported net sales was SEK 174m, -15.

5% vs. ABGSCe, -9. 5% vs.

consensus, for a y-o-y growth of -13. 8%. Management reiterates that several large orders have been delayed due to COVID-19, mainly due to customers being unable to perform field tests of Invisio’s products and that administrative tasks taking longer than usual.

This will likely pressure H1’21 as well, but management have seen an improvement in the U. S. following the finalization of the U.

S. election and less travel restriction. Its worth reiterating that these orders and projects have not been cancelled, but rather delayed as they are part of on-going modernization efforts of the customers armed forces.

The quarter also saw slightly lower gross margin than we estimated due to sales of older products, with a gross margin of 59. 1%, -3. 9pp vs.

ABGSCe. Total opex amounted to SEK 62m, 7. 5% above ABGSCe estimate of SEK 57m, where approximately SEK 7m was attributable to one-off costs associated with the Racal Acoustics acquisition.

This yielded an EBIT of SEK 40m, -43. 7% vs. ABGSCe and -40.

7% vs. consensus. We expect 5-7% negative consensus EBIT revisions We could see consensus making negative EBIT estimate revisions for 2021e of approximately 5-7%.

Final thoughts So far Invisio has already had an eventful 2021, with the acquisition of Racal Acoustics (which we view favorable given the complementary product portfolio and customer base) and updated information regarding the short-term demand from the U. S. Marine Corps procurement (which we think has been delayed, not lost).

All in all, this has made for a volatile start to 2021 in terms of share price progression.