Invisio reported revenue of SEK346m and EBITDA of SEK85m for Q4 2023, which was above our forecasts of SEK309m and SEK73m respectively. The gross margin of 57.4% was somewhat below our estimate of 61.0% where the company comments that some deliveries came through system integrators which has a lower gross margin. Opex came in at SEK136m, slightly above our forecast, but excluding an impairment of SEK6.8m, underlying opex was as expected. The company reported a solid order intake of SEK298m, which was in the high-end of our expected range of SEK250-300m. Invisio proposes a dividend of SEK1.3 per share (payout ratio of 33% vs policy of 25-50%) while we forecasted SEK1.9 (payout of 50%). The table below summarizes the Q4-results outcome compared to our forecasts.

Following the increased order intake that Invisio saw at the beginning of 2022, the company has generated solid performance with quarterly revenue of around SEK300m and solid profitability with EBIT-margin running above the threshold target of 15%. The order intake has also been stable at around SEK300m per quarter and built more on a steady flow of smaller orders rather than relying on fewer larger orders.

In the Q4-report, the company comments that it expects a continued high level of demand in 2024 with upside potential in the later part of the year as increased defence budgets could start to have a positive impact. The company also highlights its broadened product portfolio where it sees strong demand for Racal products used in military vehicles while adding that it sees potential for major orders for the Intercom system during 2024. The growth outlook is further underpinned by the launch of the next generation headset X7 coupled with increased efforts to drive sales from law enforcement, security and the firefighting market.

Overall, this supports our outlook of continued growth in 2024, and we expect the quarterly revenue to remain well-above SEK300m, albeit with the typical quarterly variations.

On the back of the strong Q4-results coupled with a positive outlook for 2024, we have slightly raised our forecasts for 2024-25E with EBITDA estimates increased c2%. Still, with tough comps after the strong growth of 60% in 2023, we remain somewhat cautious on the growth rate for 2024E where we forecast topline growth of 13%. We continue to expect continued margin expansion in the coming years as opex should grow less than topline, and we forecast that the EBITDA-margin will gradually increase from 24% in 2023 to 26% in 2024E and 29% in 2025E. The table below summarizes group key financials for 2020-26E.

We have also raised out valuation range where our new base case stands at SEK250 (SEK240) while our new bull case is SEK390 (SEK375) and the bear case SEK140 (SEK135). Our base case implies an EV/EBITDA of 31x on 2024E and 24x on 2025E forecasts, while the five-year average has been 30x NTM EV/EBITDA (range of 20-50x). At the current price of SEK206, the share trades at 25x 2024E EBITDA. The table below summarizes key assumptions for our valuation scenarios.