<a id="bm-comp-65763492-9432-4f22-941e-3ba88f7dd271" name="bm-comp-65763492-9432-4f22-941e-3ba88f7dd271" class="BMCustomAnchor"></a><table><tr><td bm-component-id="65763492-9432-4f22-941e-3ba88f7dd271" style="vertical-align: top; width:100.000000%;"><ul><li>System sales weakness behind Q4 profit warning</li><li>Adj. EBITA down 3-12% in 2024-26e</li><li>Financial headroom allows for both buybacks and M&A</li></ul></td></tr></table><a id="bm-comp-1040eb56-e69a-44f3-b7c0-80e47b8e3315" name="bm-comp-1040eb56-e69a-44f3-b7c0-80e47b8e3315" class="BMCustomAnchor"></a><table><tr><td bm-component-id="1040eb56-e69a-44f3-b7c0-80e47b8e3315" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">IT market weakness hitting Proact</h3><p>After showing good resilience so far this year, Proact had to profit warn for Q4 amid weakening IT markets and volatile (as usual) system sales, causing a drop in sales and EBITA y-o-y. The systems business has been growing on average at 2% for the last 7 years, while on a quarterly basis, volatility has been between -20 and +25% (five times) to +30-65% (three times), so the volatility in hardware deliveries is nothing new. Prozac has been more resilient than IT services peers during 2024 and IT hardware peers, such as Dustin, Bechtle and Cancom, which have all profit warned or cut guidances in 2024. Proact announced that it expects sales to decrease by 10-15% and EBITA by 20-30% y-o-y, which was materially below us. Proact mentioned that, except for the weak German market, the drop in system sales is temporary, but as the Q1'24 gross margin was particularly strong, we do not expect a significant earnings growth recovery in Q1'25 either.</p><h3 class="bm-h3">Estimates down 3-12%</h3><p>As a result of the profit warning, we cut sales and EBITA estimates by 3-6% and 3-12% in 2024-26e, respectively.</p><h3 class="bm-h3">Ample financial headroom to deploy</h3><p>Even though the share has dropped -20% over the last 3 months, it is still up 30% YTD driven by the strong start to the year. The financial headroom remains strong (net cash SEK 426m in Q3'24, or 13% of market cap), and we expect Proact to either deploy capital in share buybacks under the current program, or to complete M&A, as it is part of its strategy and the latest acquisition was done in 2022. The share is trading at 7.8x 2025e EV/EBITA on our revised estimates, which is ~25% below peers.</p></td></tr></table>