Sales increased by 10% y/y and was 8% above our expectations. Adjusted for the number of working days, the increase was 7% y/y. Avensia continues to see solid demand from new customers while the demand from current customers has stabilized, explaining why Avensia is returning to growth after six quarters with declining sales. During H1 2024, Avensia saw a stabilization of demand and more optimistic outlooks from its wide range of e-commerce customers.

EBIT was SEK11.0m (-6,6), corresponding to an EBIT margin of 9.8% (-6.5), and beat our expectations of SEK7.4m and 7.1%. The significant improvement y/y (although Q2 2023 had SEK4.8m in one-offs) is due to higher utilization rates and lower costs in general. While the EBIT margin was somewhat short of the 10% short-term target, we believe the profitability in the quarter highlights that Avensia’s financial targets (10% short-term and 15% long-term) are realistic. Reaching 9.8% in what still is a rather tough market indicates solid upward potential in normalized or better market conditions.

We raise our Base Case to SEK14 (12) following increased forecasts. Avensia is trading at ~25-35% discount to the peer average and median EV/EBIT on 2024-2025e. We believe the market does not agree with our assumption of the EBIT margin reaching ~10% in 2025e – still below potential levels in a solid market. If Avensia achieves this, we expect it to trade at an EV/EBIT multiple, at least in line with the peer average.