• Strong momentum and long runway for growth highlighted
• Military modernisation and market share gains key drivers
• We are below consensus on 2025e EBIT, although visibility is limited

Lean and mean positioned player with military tailwind

Last week we hosted Invisio's IR Michael Peterson at ABGSC's Investor Days. Mr. Peterson highlighted the current strong momentum for Invisio, both from demand tailwinds due to increased military spending and market share gains from acquisitions (continued success of Racal Acoustics) and product innovation. Invisio is a leader in communication and hearing protection for high-noise environments, which means it is primarily exposed to military organisations (90% of sales) and law enforcement, such as police and firefighters (10% of sales). Invisio has a lean business model that focuses 1) developing and innovating products, and 2) selling products, while having outsourced all manufacturing. This leads to competitive advantages in fast and scalable production and lean value chains. This is the main explanation for the 60% gross margin, while 15% of sales going to R&D results in an EBIT margin of around 20%. Invisio expects sales to grow faster than opex going forward and reported a 17% EBIT margin YTD.

Multiple growth drivers ahead

In terms of product innovation, Mr. Peterson said that he expects sales of the Intercom system (a recently launched vehicle-based communications product) to exceed sales of Personal Systems (headsets and hearing protection) in the longer term. The penetration of advanced communications and hearing protection in the military segment is low, providing a long runway for growth. As the market is niche, slow-moving in terms of decision making and long relationships (+10 years) are preferred, we believe Invisio has established a strong market position with relatively high barriers to entry. The downside is volatile order intake, as some orders can be large and come with a less steady flow. With 80% of sales coming fro