• Optimism running high after another solid quarter
• Positive long-term revisions, '26e EBIT up 1%
• We raise our fair value range slightly

Q2: Net sales +43% y-o-y (Polygiene +68%, Addmaster +27%)

Polygiene reported Q2 net sales of SEK 36.4m (SEK 25.4m), up 43% y-o-y with a positive FX effect of roughly 1% in the quarter. This was 2% better than ABGSCe, as both Polygiene and Addmaster sales were slightly better than expected. Separating the two companies in terms of external communications was the right decision, as both are now gaining additional momentum, especially in Asia. EBIT was SEK 1.2m (SEK -5.3m), behind ABGSCe at SEK 4.0m. The deviation was driven by a lower gross margin and slightly higher other external expenses. FCF was SEK 5.6m (-3.4), with the improvement a result of higher EBIT and a release in working capital.

Higher sales solidify long-term profitability potential

The Q2 report was another sign of recovery for Polygiene, and management was optimistic about continued near-term momentum with impressive Q3 sales so far. The comparable numbers from last year start to get a bit tougher in H2, but we think Polygiene is set to continue posting high y-o-y growth rates for the reminder of '24. We raise our sales estimates by 2% and think the higher sales volumes creates a long-term opportunity to raise profitability despite the lower-than-expected Q2 EBIT. We lower '24e EBIT by 23% but raise '26e EBIT by 1%, as the company has proven to be scalable in the past when sales increase.

New fair value range of SEK 6-17 (6-16)

We make slight positive adjustments to our fair value range on the back of higher sales volumes and slightly higher long-term profitability. We view the Q2 report as further proof that the company is again on the right track. In our three scenario approach, we now have long-term EBIT margins ranging from 13% to 22%. On our revised numbers, the stock is trading at a '25 EV/EBIT of 18x.