Q2 2023 net sales amounted to SEK203.9m (74.2m) and increased by c175% y/y following solid acquired growth, which was 4% below our expectations of SEK212.0m. At the same time, EBIT amounted to SEK24.9m (15.2m), corresponding to an EBIT margin of 12.2% (20.5%), stronger than our forecast of 11.3%. Notably, both the sales and margin outcomes in Q2 were largely influenced by the substantial acquisition of Connect, this being its first quarter consolidated.

We argue the margins in the quarter stem mainly from Connect’s initial dilutive effect, while synergies from the acquisitions made in Q3–Q4 2022 keep materialising. Although it will take some longer time to integrate Connect due to its larger size than previous acquisitions, we note that the most substantial initial margin dilutive effect is now completed. Consequently, we expect gradual EBIT margin improvements from here and onwards, backed by Infracom’s historical track record of realised synergies from acquisitions.

We make forecast changes following Infracom’s Q2 2023 report, decreasing our sales assumptions by 2% for 2023e–2024e while increasing our EBIT forecast by 4–5% due to a less initial dilutive margin effect from Connect than expected and faster realisations of synergies. Consequently, our DCF model gives rise to a new fair value range with a Base Case of SEK40 (38) and Bear and Bull Cases of SEK25 (23) and SEK52 (50), while Infracom is currently trading at an EV/EBIT of 10x based on our 2023e.