Equity Research, Svenska Aerogel: Savings provide improved share price potential

Svenska Aerogel (the “Company”) unveiled on Monday, April 8th, the implementation of an efficiency program poised to yield cost savings of around SEK 10 million over the next year. The program is scheduled for implementation during Q2 of 2024, with its full impact anticipated in the latter half of the same year.

In the fiscal year 2023, the Company’s cost base tallied approximately SEK 27 million, encompassing administrative, sales, and R&D expenses. When factoring in the cost of goods sold, total expenses reached roughly SEK 44.8 million. Notably, the efficiency program encompasses the enhancements in production previously disclosed in the Company’s year-end report from March, thereby influencing all operational costs.

Carlsquare Equity Research expresses a favorable outlook on the efficiency program. It anticipates that, barring changes in revenue projections, the Company could attain heightened profitability sooner than initially projected in the most recent analysis update. Previously estimating a 2028 EBITDA of SEK 9.9 million, this figure has been revised to 18.8 MSEK due to the expected improvement in profitability. The expected need for additional capital injections also decreases because of the efficiency program.

Improved profitability results in an increase in the DCF value in our valuation model. Our calculated fair value increases to SEK 0.40 per share from SEK 0.38 per share.

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