Total sales matched our forecast of SEK1,950m and amounted to SEK1,951m (1,917), corresponding to 2% growth y/y. The organic growth y/y was -2%. EBITA was SEK230m (296), corresponding to an EBITA margin of 11.8% (15.4). Although Q2 and Q3 are seasonally strong quarters, we are encouraged to see Hexatronic establishing an EBITA margin of around 11%, considering the currently soft market for the important Fiber Solutions segment.

While the North American FTTH market improved somewhat, we believe the main reason behind the relatively solid development was Hexatronic gaining market share. With a market share of 1% (or perhaps slightly higher now), Hexatronic clearly has the ability to outgrow the market with its blown fibre – which is very rarely used in the US market today. Management expects additional PE players to enter the market, which should benefit Hexatronic, considering its high relative market share towards PE players. Regarding BEAD, which is mostly relevant for the US duct offering, Hexatronic’s outlook has become somewhat more conservative, now expecting a positive impact from mid-2025 and beyond – compared to late 2024/early 2025 previously. The view aligns with what peers communicate and is based on discussions with experts.

Following the decreased forecast, primarily for 2025, we decreased our Base Case to SEK57 (59). At the same time, Hexatronic manages to generate decent profits at decent margins despite the tough market conditions in many important segments. Trading at 14x EBITA 2024e, the share seems quite attractive in our view, considering the option of a market rebound in 2025 (and if not, most likely in 2026). Thus, even if investors must wait a year from now or even longer before the market rebounds, at 13.5x EBITA, we think it is a rather attractive deal. We believe the downside risk has decreased with Hexatronic’s relatively solid performance in the two most recent quarters.