In Q2 2023, Northbaze reached net sales of SEK22m (44), marking a substantial y/y decline of 49%. We had projected Northbaze to achieve sales of SEK38m, signifying a significant deviation of -43% compared to the reported figure. The primary factors contributing to this deviation were continued low demand due to the economic climate and several customers shifting and placing orders from the second to the third quarter. This suggests a healthy order backlog heading into the fall.

We believe that Northbaze attaining its 20% growth objective in 2023 is highly unlikely. This perspective is further substantiated by management’s apparent emphasis on prioritising profitability over immediate expansion. For 2024, our projections indicate an implied EV/Sales multiple of 0.5x and an implied EV/EBITDA multiple of 3.2x. Comparatively, the peer group trades at a median EV/Sales multiple of 0.5x and an EV/EBITDA multiple of 4.4x, which suggests that Northbaze is trading at a similar level on sales but exhibits a discount on earnings compared to the peer group median.

We derive our fair value range from a fundamental DCF framework for three scenarios: base case (most likely), bear case (pessimistic), and bull case (optimistic), using a WACC of 13% for all scenarios. Our current view of Northbaze and the prevailing market conditions has led us to revise our estimates. However, these adjustments have a negligible impact on our fair value range and base case. Consequently, we maintain our fair value range at SEK0.6–1.9 and base case at SEK1.0.