<h6>Strong production numbers – pre-released in June</h6><h6>Sales estimate up 29% for the quarter</h6><h6>Q2 report due 22 August</h6><strong>Production numbers revealed ahead of report</strong><br />Sintercast revealed the Q2 Series Production numbers on July 12. They were significantly stronger than our forecast with the number of sampling cups in the quarter at 68,800 (we had 37,000) while the annualised series production reached 2.7m engine equivalents (we had 2.5m). Following this, we increase our sales estimate by 24% to SEK 24m and EBIT of SEK 7.8m. This gives a margin of 30% which is a 0.5pp improvement q-o-q and 2pp improvement y-o-y.<br /><br /><strong>EBIT estimate up 14% for 2018e</strong><br />We have raised our EBIT estimate by 14% for 2018e and by 4% for 2019e. As we are in the process of transferring coverage to a new analyst, our estimates are being reviewed and we will release a more in-depth research report in due course.<br /><br /><strong>Upside risk to estimates</strong><br />Sintercast is trading at EV/EBIT ’18e of 19.9x, a 16% premium to our capital goods sector average at 17.2x. On the other hand, we estimate that revenue will grow 14% next year. Furthermore, there is a clear upside risk to our estimates if the company manages to reach the 3m engine equivalent milestone by year-end, something that the management stated as a possibility in the last press release. For now, we have taken a more cautious stance since we want to know more about both the sustainability of the improvement and how the increased production will translate into the numbers.<br /><br />