Sales increased by 1% y/y and was in line with our expectations. Adjusted for the number of working days, the increase was 0% y/y. While not as strong as the 10% organic growth seen in Q2, compared to e-commerce-focused divisions at other listed IT consultants, Avensia seems to keep gaining market share. EBIT was SEK5.9m (8.6), corresponding to an EBIT margin of 6.4% (9.4) and roughly matching our SEK6.1m and 6.7% expectations. However, adjusting for SEK1.4m (assuming 1/3 of SEK2.1m in total is attributable to Q3) in reservations for a profit-sharing program (because of the relatively strong 2024 for Avensia so far), the adjusted EBIT was SEK7.3m, corresponding to an adjusted EBIT margin of 8.0% - not bad in a soft market.

The somewhat positive sentiment Avensia saw during H1 2024 softened slightly during Q3. Perhaps some companies spent their budgets in H1 hoping for a better market that has not taken off so far. Also, Avensia notes that some projects are on hold. However, the demand from current customers is relatively stable and has improved y/y. In Sweden, lower interest rates are expected to strengthen demand gradually, while the important Norwegian market is expected to lag.

Following flat forecast revisions, we keep our Base Case at SEK14 (14). Avensia is trading at ~30-45% 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.