Gapwaves delivered strong numbers that beat RRe and Cons, partly driven by equipment sales of SEK9.5m. Net sales were SEK18.4m versus RRe of SEK10.6m. EBITDA excl. ACI came in at SEK -6.7m (EBITDA excl. ACI SEK -9.6m last year). Gapwaves reported a loss from associates (Sensrad) of SEK3.5m, improving from a loss of SEK6.5m last year. Gapwaves states it is partly due to increased sales within Sensrad along with cost controls.

Hella has reached start of production (SOP), with Valeo expected in 2025e and Bosch 2026/2027e. Thus, Gapwaves is set to scale its net sales rapidly henceforth within the automotive market. Gapwaves has stated Valeo is worth ‘mid-double digit million EUR’ and Bosch is expected to be worth ‘high double-digit million EUR’ over several years. Notwithstanding a challenging automotive market, Gapwaves reiterated waveguide antennas continue to demonstrate robust growth driven by regulatory forces. We anticipate high-resolution radars will grow units >30% CAGR till 2028e. Gapwaves remain unaffected by the broader climate but note possible postponements and longer procurement processes.

We raise our automotive expectations, mainly short-term NRE while revising our Mobility and Telecom expectations. We expect scant telecom revenue and markedly reduced mobility expectations in the short-to-medium term. New tier-1s could catalyse the share, although Gapwaves Asian tier-1 remains in phase 1 and is likely more than a year before a production contract is even considered. Investor perception of automotive exposure remains poor. Thus, improving sales according to expectations is another catalyst. We reduce the Base Case from SEK39 to SEK35.