• Q4e: orders flat, sales -2%, EBITA margin -2.9pp y-o-y
• EU PMI remains below 50, push forward recovery
• Estimates: '25e-'26e sales down 5%, EBITA down 9%

Q4 expectations

For Q4, we expect order intake of SEK 212m, in line with last year, and sales of SEK 230m, down 2% y-o-y with the T&D segment continuing to drive the decline. On the EBITA margin, we have 3.8% (6.7%), with the decline driven by tough comps in E&E and the soft sales volumes making it difficult for the T&D segment to leverage its fixed costs to a satisfactory degree.

Estimate changes

With the European PMI, which correlates decently with order intake, remaining below 50 for longer than previously anticipated, and Q4 likely to mark the fifth quarter in a row with a book-to-bill below 1.0, we push forward the anticipated recovery in our estimates, reducing '25e-'26e sales by 5% and EBITA by 9%.

Company valuation

While we think progress has been made with regard to improving underlying profitability, order intake still needs to pick up for the group to properly leverage its fixed costs. We also await news on a return to M&A in the group, which would provide some welcome upside to our estimates. The company is currently trading at 16-12x '24e-'26e P/E on our updated estimates, compared to its historical median of 13-11x. We revise our fair value range to SEK 30-50 (40-55) on the lower estimates and a higher market discount rate.