Redeye provides an update on Scandinavian ChemoTech following the Q2 2024 report. We view the performance from the company to be in line with forecasts, with the deviations partly a result of one-offs. We mostly maintain our estimates and make a miniscule adjustment to our valuation range.

Q2 review: Impressive cost control and sales increasing

Scandinavian ChemoTech

* The company generates no profits and negative cash flow, indicating a lack of a proven business model and potential for shareholder dilution.
* There are no easily identifiable sustainable competitive advantages, making long-term profitability uncertain.
* The company shows signs of weakening competitive advantage, which could lead to declining profit margins and cash flows.
* The core business has a fair chance of failure, presenting a high-risk investment with potential for permanent capital loss.
* The company lacks a diversified and wide revenue base, increasing vulnerability to market fluctuations and customer loss.

* The company benefits from secular tailwinds that support growth, positioning it to capitalize on long-term market trends.
* Products contribute to the greater good, aligning with increasing investor focus on ethical and socially responsible businesses.
* The company works closely with customers to innovate, fostering collaborative creativity and ensuring adaptability to shifting demands.
* Earnings are largely unaffected by commodity prices, offering more stable investment opportunities and predictable returns.

* The company has historically had a somewhat inconsistent track record regarding clinical deadlines and unfulfilled sales targets, although the most recent history shows an improvement. 
* The CEO’s pay exceeds the total shareholder return relative to peers, and according to our criteria, the compensation structure appears slightly imbalanced among executives.

* Strong founder mentality: CEO is one of the founders and still, naturally, active in the business. 
* Commitment to innovation: Management focuses on developing and commercialising a new treatment method (TSE).
* Significant insider ownership: Management, primarily through the CEO, owns about 10.5% of the company, aligning their interests with shareholders and demonstrating confidence in the business.

SEKm	2022	2023	2024e	2025e	2026e
Revenues	0.51	2.8	7.2	12.7	21.6
Revenue Growth	-80.3%	453%	155%	77.0%	70.0%
EBITDA	-18.0	-17.7	-10.5	-8.6	-4.9
EBIT	-20.9	-20.4	-12.5	-10.6	-6.9
EBIT Margin	-4421%	-723%	-175%	-83.1%	-31.8%
Net Income	-22.7	-21.3	-14.0	-10.6	-6.9
EV/Sales	127	17.2	10.2	6.9	4.4
EV/EBIT	-2.9	-2.4	-5.8	-8.3	-13.7

Financial review

Activities in the quarter

Estimate and valuation changes

Key financials

Q2 review: Impressive cost control and sales increasing