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Strong Q4, both in terms of sales and marginsOvzon ended 2025 on a strong note, with Q4 sales +159% y-o-y, driven by recent order announcements. This was 18% above our estimate, primarily due to higher terminal sales (coming in at SEK 100m vs our forecast of SEK 65m), but also due to higher SATCOM sales. Typically, this sales mix would have a negative impact on margins, but the gross margin in Q4 was surprisingly strong at 58%, which we believe was potentially due to favourable FX and price adjustments. With an incremental EBIT margin of 54%, Ovzon demonstrated the high operational leverage in its business model, driving EBIT 83% ahead of our forecast. FCF was also good, driven by pre-payments. In our view, this shift in payment terms signals strength and underlines robust demand and Ovzon's strong market position. Positive estimate revisionsThe recent increase in order activity meant that the Q4 backlog of SEK 1bn remained robust. This provides high visibility for estimates, with ~800m of our SEK 1,068m sales forecast for 2026 being covered by the current backlog. Throughout the year, we expect Ovzon to announce more orders, including those related to Ovzon-3. We expect Ovzon-3 will reach ~50% utilisation in Q2e (driven by an order from a NATO customer), and ~70% in Q4e. Also, we highlight that 2026 will be another strong year in terms of terminals, which is positive for the future as it is a good indicator for SATCOM demand. All in all, we lift '26e adj. EBIT by 17% on positive sales revisions. Demand is supporting more satellite projectsThe stock is up 34% YTD, trading at 19x '26e EV/EBIT on our new estimates. Given the recent momentum, we continue to see upside risks to forecasts, and look forward towards getting more details around potentially new satellite projects (which current demand is supporting). |