Sales increased by 19% year over year, and organic sales growth was 9% excluding currency effects in Q2. This was in-line with our estimates. The adjusted EBITA margin was solid and came in at c18.7% with organic EBITA growth of c1%. Net profit was negatively impacted by higher financing costs and a higher tax rate and earnings per share decreased with c8%. Cash conversion of c83% was strong and we believe in continued strong cash flows ahead. The company meets tough comparables in Q3 and we expect a slowdown in organic growth.

Sdiptech has had to adjust to the higher interest rate environment by slowing down its acquisition pace. It is now back to a reasonable gearing level and considering expected lower interest rates ahead we believe the company will gradually increase its acquisition pace. The company faces significant earn-out payments in the current year and in future years but we expect it to tackle that with strong cash flows and discipline around valuations leading to a net debt ratio around current levels.

We increase our Fair Value Range from SEK200 to SEK580 to SEK220 to SEK600 with a Base Case per share of SEK400. The market’s reaction to the Q2 report was somewhat muted, but expectations was also high after a 40% appreciation since the release of the Q1 report. We believe continued stable results will drive the stock upwards.