• Solid Q4, despite tough comps
• Strong orders (+52% y-o-y) and profitability improvements
• 14x-9x '25e-'27e EV/EBIT

Orders picking up

Despite tough comps from Q4'23, Cavotec delivered a solid Q4. The company reported sales of EUR 45m, down 15% y-o-y but up 3% q-o-q. Order intake was particularly strong in the quarter, at EUR 62m (vs. ABGSCe 43m), +52% y-o-y, implying a book-to-bill of 1.35x, the highest level since Q1'23. Orders were largely driven by orders within shore power, with strong demand in Europe, driven by regulations (EUR 17.5m announced orders in Q4). We find it positive that order intake is picking up after a period of a lower book-to-bill. In terms of profitability, the company's increased focus on operational efficiency enabled it to increase its EBIT margin to 8%, the highest level since Q4'19, driven by strong margins in the PM segment (EBITDA margin of 17.6%).

Still waiting for Industry

We make only slight changes to '25e-'27e sales and EBIT. Ports & Maritime continues to be the margin driver, but we are expecting Industry to pick up with the help of the ongoing change programme (started in 2024). However, we believe these improvements will take longer to materialise than we first anticipated. We now estimate EBITDA margins in Industry to reach >10% from '26 (prev. 2025). We believe an improvement in Industry's margins is essential for the company to achieve its 10% EBIT margin target. The company writes in its report that it will continue to work towards increased profitability though efficient, centrally managed purchasing processes, reducing costs.

Long-term view unchanged

The share is trading at 14x-9x '25e-'27e on EV/EBIT and 26x-15x on P/E. We continue to find the longer-term potential in shore power and industrial electrification appealing, driven by regulations and megatrends. We believe Cavotec has the potential to reach >10% EBIT margins from '27e, provided management is successful with the transformation.