Ovzon - Well-placed to achieve improved sales

Sales -49% y-o-y, hurt by lower utilisation We expect sales growth in ’21e, but lower our forecasts Ovzon is well-placed for growth Q4 was slightly below our expectations Ovzon achieved sales of SEK 34m (-8% vs. ABGSCe SEK 34m) for y-o-y growth of -49%. The sharp sales decline was expected, given the lower order value that Ovzon announced earlier in 2020. The lower utilisation hurt gross margins, which were 18% vs.

51% in Q4’19. As such, gross profit shrank 64% y-o-y and was SEK 6m. Opex of SEK -29m was in line with our forecast, but the sales miss led to an EBIT shortfall of 38% vs.

ABGSCe (SEK -22m vs. ABGSCe SEK -16m). Overall, Q4 was slightly below our expectations, but encouragingly, the company’s reiterated its timeline for Ovzon-3, with anticipated launch in Q4’21.

Estimate changes Ovzon has signed several new leased capacity agreements in 2020, upon which it now has accesses to more or less all available Ovzon-3-related capacity in terms of quality. The company guides for improved sales in 2021, but does not expect all of its available capacity to be sold in the first part of the year. Owing to this, together with recent USD/SEK movements, we lower our ’21e sales by 25% to SEK 201m, which corresponds to 26% growth y-o-y.

Furthermore, we previously expected Ovzon-3 to generate sales beginning in Q1’21, but we now expect this to happen in Q2’21. We thus reduce our ’22 sales forecast by 23%, giving a 35% cut on our ‘22 estimated EBIT. New CEO as of 1 May 2021 In conjunction with the report, Ovzon announced that it has appointed a new CEO, Per Norén.

The current CEO, Magnus René, has been at the helm since May 2019, and will remain at the company as a board member. Mr. Norén holds comprehensive experience from the satellite industry, having worked at both Global Eagle and Boeing.

We remain positive about Ovzon’s long-term growth outlook after the Q4 results and the management change. The share is now trading at 12-9x ‘22-‘23e EV/EBIT. It should be no.