Ovzon - Greater confidence in improved sales in H2
Sales +10% q-o-q, to SEK 37m (ABGSCe SEK 37m) We take a more conversative view on Ovzon-3 sales… …but leave ‘23e forecasts largely unchanged Sales in line with ABGSCe, but a shortfall on EBIT Although Q1 sales of SEK 37m declined 38% y-o-y, this was 10% growth q-o-q, mainly driven by a renewed order for the US DoD. Because Ovzon still has some available capacity, the gross margin contracted to 7% vs. 30% in Q1’20. Opex of SEK 34m was higher than our forecast of SEK 28m, partly due to some non-recurring items related to the listing of its shares on Nasdaq Stockholm Mid Cap.
This led to EBIT of SEK -31m (vs. ABGSC SEK -16m), down vs. SEK 5m in Q1’20.
Cash at the end of the period was SEK 93m (but in April, it used USD 35m of its USD 60m loan facility). The company reiterated its timeline for Ovzon-3, with an anticipated launch in Q4’21 (and in operation by Q2). We think it is encouraging to see the company announcing several new orders in the quarter.
Although these order values are (still) relatively low, it shows that the company’s plan to broaden its customer base is gaining ground. In particular, we find it positive that the Italian National Fire Corps decided to quadruple its capacity bought from Ovzon, which suggests that it is pleased with the service. We now estimate Ovzon-3 sales from Q3’21 (earlier Q2’21) We keep our leased capacity sales forecast largely unchanged after the report.
That said, we have taken a more conservative view on Ovzon-3-related sales. We had expected the 64% utilization for ‘22e, which we now lower to 20%, with sales generation starting in Q3‘22e (previously Q2), and then gradually improving in the subsequent quarters. As such, ‘22e sales is reduced by 46%, while we keep our opex estimates largely unchanged.
For ‘23e, we only make small revisions. We continue to estimate improved sales in H2’21 Ovzon is guiding for increased sales in 2021 vs. 2020.
This will require sales to grow in H2 (vs. H1). Given the relatively large.