Redeye concludes that Q2 revenues were weaker than expected, derived from short-term delays and order timing. However, with H1 showing a solid order intake, our and management’s expectations for H2 remain high. We reiterate our Base Case of SEK1.3.

Starbreeze

BrightBid

Avtech Sweden

TagMaster

Image Systems

Heliospectra

* Less than 50% of existing revenues are recurring, potentially impacting business stability and predictability.
* Generates no profits and negative cash flow, which may lead to dilution of shareholder value through fundraising.
* Earnings affected by commodity prices, particularly electricity costs, which impact customers in the horticultural industry.
* Limited cyclical or capital markets independence, potentially exposing the company to economic fluctuations.

* Strong market position in Agtech segment with significant growth potential in greenhouses and vertical farming.
* Asset-light business model allowing for scalable growth without expensive reinvestment.
* Successful expansion into new geographic markets, demonstrating adaptability and growth potential.
* Benefiting from secular tailwinds in sustainable agriculture and advanced lighting technologies.
* Products designed for longevity, lasting over a decade and offering sustained value to customers.

* Heliospectra's operating margin is below the desired thresholds, suggesting potential profitability challenges.
* Revenue and earnings growth have been inconsistent and below industry averages, potentially signalling competitive pressures or market saturation.
* The company’s financial health indicators, such as current ratio and debt management metrics, fall short of recommended levels, raising concerns about liquidity and financial stability.
* Heliospectra does not demonstrate strong dividend performance or growth, which may be less attractive to income-focused investors.

* Operating Margin (EBIT) has increased for three consecutive years, indicating improved cost management and operational efficiency.
* The company has maintained low one-time charges to sales, averaging less than 3% over the past five years, demonstrating financial transparency.

* Limited gender diversity on the board, with less than one-third of seats held by women, potentially impacting decision-making and talent retention.
* Lack of significant insider ownership, with management owning less than 5% of equity, which may affect alignment with shareholder interests.
* Unclear track record of consistently delivering on promises and generating attractive returns on capital investments.
* Limited founder involvement in the business, which could impact the preservation of original vision and entrepreneurial spirit.

* Strong CEO leadership with deep industry knowledge and a clear strategic vision for long-term value creation and profitability.
* Lean, decentralized organization promoting accountability and innovation, with a focus on customer needs and adaptability.
* Commitment to innovation demonstrated through continuous product development and strategic partnerships in the horticulture industry.
* Presence of controlling owners with long-term commitment, aligning management interests with shareholders and fostering stability.

SEKm	2022	2023	2024e	2025e	2026e
Net Sales	25.7	35.3	48.6	97.7	146.6
Sales Growth	-26.9%	37.4%	37.7%	101%	50.0%
EBIT	-36.0	-23.7	-7.6	-4.8	15.7
EBIT Margin	-140%	-67.1%	-15.6%	-4.9%	10.7%
Net Income	-36.1	-22.7	-7.6	-4.8	15.7
EV/Sales	4.4	1.8	0.9	0.5	0.3
EV/EBIT	-3.2	-2.7	-5.7	-10.3	2.4

Q2: Weaker sales, minor deviations elsewhere

High expectations set for H2 2024

Intact Base case at SEK1.3 per share

Key financials