SinterCast - Market weakness and FX still major headwinds

• We forecast sales -27% y-o-y, driven by EEs -13% and FX -9%
• Substantial market weakness, tough comps & FX headwinds in '25e
• Pent-up demand, programme starts & installations bode well for '26e

Q4 expectations

With the automotive market still experiencing demand challenges, we expect engine equivalent production of 2.7m, in line with Q3 but down 13% y-o-y. We forecast strong installation revenue of SEK 4.9m, bringing the full-year figure to SEK 10m as guided for by the company, but this faces even stronger comps of SEK 6.8m. All-in-all we estimate a 27% decline in revenue y-o-y, with the weakening USD constituting a 9% headwind. With the cost base largely unchanged and an estimated margin effect from hedges of +2.2pp (-6.3pp), this results in an EBIT margin of 20.9% (26.5%).

Estimate changes

We cut '26e-'27e sales by 6% and EBIT by 11-12%, almost exclusively driven by the weakened USD/SEK exchange rate.

Outlook and valuation

2025 was a year of substantial market headwinds and tough comps, given the production programme that reached end of life in Q3'24, amplified further by the drastically weakened USD vs. the SEK, as all of SinterCast's sales are USD denominated; however, pent-up demand for truck fleet renewal as well as delayed programme starts and strong installation activity bode well for a return to growth in 2026e. We forecast EPS growth of 16% and 32% over the coming two years, leaving the company trading at P/E 24-18x on '26e-'27e.