Net Sales came in at SEK7.8m, 14% y/y, well below our estimate of SEK9.5m (deviation -18%). YTD net sales are SEK26.1m versus SEK24.0m in the same period last year. Thus, 8.6% net sales growth YTD. We consider this acceptable considering the pent-up demand in 2023, which we estimate to be some SEK5.5m. Despite the lower sales than expected, Gasporox remains EBITDA positive at SEK0.1m. Cash flow was -SEK2.2m, and the cash balance SEK8.4m. We do not anticipate equity issuance is necessary as Gasporox has the inventory required to support sales on hand.

Gasporox is working in a three-phased R&D cycle of product extension (e.g., GPX1500 Total Pressure), product expansion (e.g., AutoMap), and new markets (e.g., porosity testing). We understand that EBIT is pressured primarily by the latter two initiatives while the ‘core’ business is profitable and growing decently. Although each phase is required for long-term growth, we believe investors struggle to value these initiatives separately (us included), resulting in a lower valuation of the Group.

Last year, Gasporox secured a strong order book to deliver in H2 2023/H1 2024. This year, Gasporox has not made such press releases yet (Gasporox only press release orders >10% of last year's net sales). Thus, visibility into Q4 and beyond is limited. However, our interview with CEO Märta Lewander Xu indicated that Gasporox appears confident for Q4 and the start of next year. However, we have reduced our net sales estimates for 2024e by 6% due to the low visibility. We have also increased OPEX slightly, resulting in an EBITDA reduction between 35-42% for 2024-2026e. Based on lower EBITDA projections, we reduce our fair value range from SEK9-35 with a Base Case SEK18 to SEK7-30 with a Base Case of SEK15. We believe strong results leading to a reacceleration in LTM sales figures may catalyse the share. Adjusting 2023e for what we believe is pent-up demand, the reacceleration trend is already visible.