CTEK reported net sales of SEK222m (Redeye estimate SEK215m), representing 15% org. growth (est 8%) relative to SEK199m in Q3 2023. The beat is driven by higher-than-expected low-voltage sales in both the Consumer and Professional segment, which stems from higher demand in key markets. The high degree of low voltage sales also drove the gross margin increase, which amounted to a total of 56% (est 54%) relative to 52% Q3 2023. Together with CTEK’s relatively fixed cost base, where OPEX amounted to SEK-83m (est SEK-81m) relative to SEK-89m Q3 2023, the adj EBITA margin amounted to 14% (est 11%) relative to 9% Q3 2023.

The Q3 report beat our sales- and profitability estimates, but the EVSE business is developing slower than expected. As a result, we postpone our EVSE sales curve somewhat, as the market is still going sideways. However, we increased our low-voltage sales, which also had an accretive margin effect. All in all, the combined EBITA effect of our estimate changes was positive during our estimate period.

We consider the Q3 report strong and think CTEK keeps improving step by step. The strategic initiatives to focus on sales, primarily within low voltage, and to reduce costs are bearing fruit. We also think that there is still plenty of demand to harvest within low voltage (which the reported numbers also suggest), and we think it is only a matter of a few quarters before the professional segment starts reporting black figures, which should bring the attention of more investors. The CTEK shares are trading in line with its all-time low (May 2023) despite posting four consecutive quarters of high adj. EBITA y-o-y growth (albeit from low levels). A fact we think is unwarranted. We reiterate our fair value range of SEK12-SEK42 with a base case of SEK28 per share, which is further supported by a peer-based SOTP valuation scenario in which we try to assess the value of the low-voltage and EVSE businesses separately.