Proact - Favourable market conditions in Q3e as well

• A combination of growth and cost reductions...
• .. and a balance between pricing tailwinds & extended lead times
• Small revisions to estimates, adj. EBITA +0-2%

Combining top-line growth with lower costs

Q2 adj. EBITA was 7% better than we expected, growing 39% y-o-y on a combination of 10% revenue growth and 1% lower opex. The system sales market remains volatile, however, due to the sharp increase in memory prices. While serving as a tailwind to growth, it is also a headwind on volumes, as it extends delivery times in the market. We therefore expect the 12% organic growth in system sales to rise further to 15% in Q3e before coming down to 2% in Q4e, which we view as relatively in line with Proact's comments about a favourable set-up in Q3 and more uncertainty in Q4. The uncertainty in Q4 is mostly related to the longer delivery times and whether some deliveries will be pushed into 2027. The cost programme in 2025 is bearing fruit and the lower cost base should prove sustainable ahead.

Small estimate revisions

As the report was broadly in line with our estimates, we make only minor revisions. System sales are slightly higher while service sales are slightly lower, leaving our group sales forecast almost unchanged. On adj. EBITA, we raise 2026e by 2% while leaving 2027-28e unchanged, but we acknowledge relatively high estimate uncertainty ahead.

Share at 7.6x 2026e EV/adj. EBITA

On our updated estimates, the share is trading at 7.6x 2026e EV/adj. EBITA, and we currently expect -4% adj. EBITA growth in 2027e driven by a normalisation in the market and somewhat higher costs. Near-term, we expect earnings growth to be strong, with adj. EBITA +33% y-o-y in Q3e. Proact will hold a CMD in H2'26, and given the current LTM adj. EBITA margin of 7.9% vs. its target of >8% it will be interesting to see if it raises its margin target or intensifies growth plans.