Q2 2023/24 was a challenging quarter. Net sales decreased 70% y/y and came in at SEK33m (110) due to challenging market conditions and tough comps from last year's exceptional market conditions, especially within the residential segment. Particularly shown on the important Danish market, which contributed with cSEK6m in sales in Q2 2023/24 versus cSEK39m in Q2 2022/23.

Management stated that the market challenges will likely remain for one or a few quarters, but that a rebound in the market may be closer than expected. We expect sales and profitability to improve in H2 2023/24e based on introducing and re-introducing subsidies in several key strategic markets such as Germany, Denmark, the UK, and Austria from 2024e, as well as the commercial partnership with Aira starting to yield effects. However, we first expect sales growth from Q4 2023/24e.

On the back of the Q2 2023/24 report, the continued challenging market environment, and lower visibility, we considerably lower sales and EBIT estimates in 2023/24-2025/26e. Following our revised estimates and a higher WACC from raising our risk-free rate, we lower our valuation. Our new valuation range is SEK50-SEK160 (100-275), with a base case of SEK90 (150). Our base case of SEK90 corresponds to 14.5x EV/EBIT(24/25e), c5% discount versus our broader selected peer group, and a c30% discount versus Nibe and Beijer Ref.