Heliospectra reported a flat growth rate y/y, resulting in net sales of SEK9.9m, below our expectations of SEK12.2m, resulting in a -19 % deviation. Order intake was SEK9.4m, 15% below our forecast of SEK11m. The gross margin of 28% is 16pp below our forecast of 44%. OPEX amounted to SEK9.m, a decrease of SEK4m y/y and on par with our estimate. The lower-than-expected gross margin led to a higher operating loss (EBIT) of SEK7.6 million compared to our estimated SEK3.8m.

In 2023, despite severe market challenges, net sales experienced a 37% year-over-year growth. Factors such as inflation, higher interest rates, reduced energy prices, and a delayed subsidy program in the Netherlands led to a significant drop of 40-50% in the market for cultivation lighting, according to the report. Consequently, many commercial growers and customers deferred their investments to 2024 or chose smaller initial test installations. Meanwhile, Heliospectra expanded its industry network in 2023, allowing it to pursue larger projects and bolster the pipeline for 2024. As a result, Heliospectra anticipates a shift in its portfolio towards larger commercial greenhouses in 2024. We expect that Heliospectra will capitalise on the rebound in the Duch market with its new product platform throughout 2024. However, due to softer-than-expected order intake in Q4 2023 and seasonal effects, we foresee a softer first half followed by a stronger second half in 2024. For 2024e, we factor in a c61% y/y sales growth, equal to cSEK57m.

On the back of the Q4 2023 report, we have adjusted our estimates, primarily impacting H1 2024e by trimming our sales and cost base estimates. Additionally, we foresee a high likelihood of the bridge loan, obtained in November 2023, being settled through a directed share issuance rather than a cash repayment. Consequently, we have adjusted our valuation for the anticipated dilution. Our adjustments leave our Base and bear case intact at SEK1.4 and SEK0.4 per share, respectively, while the Bull case comes down by 10%. Our fair value range is adjusted to SEK0.4-SEK3.6 per share (previously: SEK0.4-SEK4.0). Heliospectra is trading at an EV/Sales multiple of 1x based on our 2024e.