Incap

Country:
Sector:
Market cap (m):
Finland
Capital Goods
EUR 269.22
Bloomberg:
Reuters:
Website:
ICP1V FH
ICP1V.HE
Share price (close):
EUR 9.21

Latest Reports

23 FEB 2024
Commissioned Research: Darkest hours could be over
Incap's Q4 net sales and adjusted EBIT margin beat consensus (LSEG Data & Analytics) expectations. Profitability remained decent, despite the 46% y/y drop in net sales in Q4. With the EBIT margin not a problem, the investment case is more focused on revenue growth after the remarkable dip seen in H2 2023. Incap already guides for a q/q improvement in sales, and might internally be aiming for y/y growth in 2024, even though the official guidance indicates lower revenue y/y for 2024. The company does not pay a dividend, which is in line with consensus expectations. Having trimmed our long-term estimates, we derive a new fair value range of EUR 10.8-13.2 (11.8-14.5) per share, based on a DCF analysis backed by a peer group comparison. Marketing material commissioned by Incap.

22 FEB 2024
Commissioned Research: Flash Comment: Q4 was above consensus but FY 2024 EBIT is guided below last year
Net sales was 7% above consensus (LSEG) in Q4. Also adjusted EBIT margin of 10.4% was above consensus (7.6%) in Q4. Utilisation ratio management has been successful. However, full year 2024 EBIT is guided down y/y which could lead market consensus EBIT to be downgraded by EUR 2-3m we believe. The destocking effect will still impact the revenue in H1 2024 but Incap has already started to increase the number of employees in India. Net sales could start to grow on q/q basis in 2024. Organic growth without the largest customer was even 17% in Q4 y/y. The company do not pay dividend which is in line with consensus expectations.

29 JAN 2024
Commissioned Research: Guidance should indicate revenue growth in 2024
Our estimates for net sales and EBIT are slightly above consensus for Q4. We expect full-year guidance to highlight growing revenue for 2024 y/y, and we argue that flat growth guidance would be a great disappointment. One key issue affecting revenue growth will be order intake from the biggest customer, which underwent inventory destocking in H2 2023. Visibility for the full year could remain weak but we forecast 19% revenue growth for the year (2023E: -16%). Ahead of the Q4 earnings announcement, we keep our fair value range of EUR 11.8-14.5 per share intact, based on a DCF analysis and peer group comparison. Marketing material commissioned by Incap.

26 OCT 2023
Commissioned Research: Q3 was a relief but uncertainty on 2024 remains
Q3 net sales and clean EBIT were above Refinitiv consensus expectations. Excluding its largest customer, Incap's revenue grew by 20% y/y in Q3 2023. Profitability has remained at a good level despite the 29% decline in reported net sales y/y. Full-year guidance was reiterated but visibility is weak and volatility in orders could remain high in the near future. We still believe that the main customer's destocking process is a one-off event and likely will end in H1 2024. Our new fair value range of EUR 11.8-14.5 (12.7-15.6) per share is based on a DCF analysis backed by a peer group comparison. Marketing material commissioned by Incap.

25 OCT 2023
Commissioned Research: Flash Comment: Q3 was better than consensus and FY guidance is unchanged
Net sales was above consensus (Refinitiv) in Q3. Clean operating profit margin was also better than consensus in Q3. Inventory destocking effect was not as bad as feared during Q3 but the full impact of the decreased volumes will become visible during the fourth quarter. However, relative profitability should remain good because Incap has reduced workforce by 1136 people in India to keep utilization ratios at healthy level. The company could even be able to grow organically in near future. Guidance for the full year 2023 was repeated and market consensus for the net sales in this year could even be upgraded after Q3 release we believe. However, uncertainty related to the biggest customer and delivery volumes in 2024 may remain.

6 OCT 2023
Commissioned Research: Destocking is taking longer than expected
Incap downgraded its 2023 guidance on 5 October due to weaker-than-expected orders from its main customer, which is conducting an inventory destocking. The midpoint of the new guidance for net sales is 13% below Refinitiv consensus. We believe the main customer's destocking process is a one-off event, and that higher interest rates and declining power prices have not permanently reduced investments in renewable energy. We trim our estimates for next year and our fair value range shifts slightly to EUR 12.7-15.6 (13.5-16.5) per share due to increased uncertainty in the medium term. Our fair value range is based on a DCF analysis, backed by a peer group comparison. Marketing material commissioned by Incap.

31 JUL 2023
Commissioned Research: Confident about its full-year guidance
Incap is relatively confident about its full-year net sales development, despite inventory destocking by its main customer. The company also expects to defend profitability through personnel reductions. We argue that risks related to H2 2023 are lower following the Q2 earnings release. Customers (aside from its largest) were growing 15-20% y/y in Q2 and there is a possibility that the destocking effect will end in Q1 2024. Incap's EV/EBIT valuation for 2023-24E is now ~18% below its peer group, even though it has a clearly higher return on invested capital. Our unchanged fair value range of EUR 13.5-16.5 per share is based on a DCF analysis and backed by a peer group comparison. Marketing material commissioned by Incap.

28 JUL 2023
Commissioned Research: Flash comment: Good profitability in Q2, full year guidance unchanged
Net sales was close to consensus (Refinitiv) in Q2. Clean operating profit margin was better than consensus in Q2. Pennatronics acquisition will add 14% to annual net sales, of which some 6% in this year. Guidance for y/y declining net sales for the full year 2023 was repeated. The effects of big customer's inventory reductions were only partially visible in Q2, and most of the impacts will be visible in H2 2023. We forecast that a customer specific need for destocking could lower organic revenue by 12% in 2023 but estimates for second half of 2023 includes a lot of uncertainty. However, the company should be able to sustain its operating margin to 13-14% thanks to its proactive management of utilization ratios which practically means personnel reductions in India.

25 JUL 2023
Commissioned Research: Second half of 2023 includes a lot of uncertainty
We expect relatively good Q2 results, but H2 2023 estimates include a lot of uncertainty due to a major customer's need to reduce inventory. Our full-year 2023 organic revenue growth forecast is currently -12% (reported growth forecast -7%). Incap's biggest customer still has a competitive portfolio, which is why we are not overly concerned about next year. Our forecast for organic sales growth next year is 11%, with additional M&A growth potential of 6%. We believe Incap will be able to sustain its operating margin close to 13% thanks to its proactive management of utilisation ratios. Our fair value range of EUR 13.5-16.5 per share is based on DCF analysis and backed up by a peer group comparison. Marketing material commissioned by Incap.

3 MAY 2023
Commissioned Research: Gathering strength
Quality, reliable delivery and low costs are the main success factors in the competitive EMS sector and, in our view, Incap has them all. Incap also has a clientele portfolio that can offer notable and long-term growth potential. The company's business is concentrated on renewable energy and energy security. We also believe that Incap will be able to sustain its operating margin above 13% thanks to its competitive and decentralised production platform. We initiate coverage of Incap and calculate a fair value range of EUR 13.5-16.5 per share. Our valuation approach is based on a DCF and backed up by peer group comparison. Marketing material commissioned by Incap.

Equity analysts

Key persons

CEO: Otto Pukk

CFO: Antti Pynnönen

Chairman: Ville Vuori

Numbers
Export to Excel
Nordea
EURm
2020
2021
2022
2023
2024E
2025E
2026E
Total revenues
106.5
169.8
263.8
221.6
218.0
272.0
293.8
Ebitda (adj.)
15.94
29.26
42.64
35.55
33.71
40.42
43.68
Ebitda - margin
15.0%
17.2%
16.2%
16.0%
15.5%
14.9%
14.9%
EBIT (adj.)
12.6
26.0
38.9
30.5
27.6
34.3
37.3
EBIT (adj.) margin
11.8%
15.3%
14.7%
13.8%
12.7%
12.6%
12.7%
PTP (adj.)
11.5
25.7
36.6
28.7
22.7
29.2
32.1
Net profit from cont oper (adj)
9.22
21.06
27.55
22.12
17.89
22.84
25.03
Shareholders´ Equity
38.6
62.9
87.4
106.8
122.0
142.2
164.5
Net interest bearing debt
5.4
1.7
13.6
-8.5
-19.6
-31.1
-50.4
Net gearing
13.9%
2.7%
15.6%
-7.9%
-16.1%
-21.9%
-30.7%
Net debt/EBITDA
0.3
0.1
0.3
-0.3
-0.6
-0.8
-1.2
Free cash flow to equity
-4.8
4.5
-6.2
25.3
12.6
13.1
20.9
Diluted number of shares in issue, year-end (m)
22.9
29.3
29.3
29.4
29.4
29.4
29.4
Nordea Markets estimates published on Feb 23, 2024
Source: Company data, Nordea estimates
Per share data and multiples
Export to Excel
Nordea
EUR and %
2020
2021
2022
2023
2024E
2025E
2026E
EPS (adj.)
0.40
0.72
0.94
0.75
0.61
0.78
0.85
EPS (adj.) growth
40.3%
78.2%
30.8%
-20.1%
-19.1%
27.6%
9.6%
DPS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
BVPS
1.7
2.1
3.0
3.6
4.1
4.8
5.6
P/E (adj.)
9.1
21.8
18.2
10.3
15.1
11.9
10.8
EV/Sales
0.84
2.72
1.95
0.99
1.15
0.88
0.75
EV/EBITDA (adj.)
5.63
15.77
12.07
6.16
7.46
5.94
5.05
EV/EBIT (adj.)
7.12
17.77
13.23
7.17
9.12
7.00
5.91
P/BV
2.19
7.31
5.73
2.13
2.22
1.91
1.65
Dividend yield
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
FCF Yield bef A&D, lease adj
0.7%
0.8%
-1.5%
16.0%
4.1%
4.3%
7.1%
RoE
30.5%
41.5%
36.7%
20.4%
13.3%
15.3%
14.6%
ROIC
27.4%
34.5%
34.4%
22.5%
20.3%
24.0%
24.8%
Nordea Markets estimates published on Feb 23, 2024
Source: Company data, Nordea estimates

Source: LSEG Data & Analytics