Incap

What is the difference between Incap and Scanfil?

Incap's Q3 report was mixed, as against a much better-than-expected Q3, guidance indicates a very poor Q4 and the significant uncertainties surrounding the near-term sales to the largest customer are largely unchanged.

Incaps Q3 var svag men beroende av största kunden minskade. Hur ser situationen ut i Indien? Finns de tecken av svagare efterfrågan bland andra kunder? Hur ser utsikterna ut i EMS branschen? VD Otto Pukk svarar bl.a. på dessa frågor.

The second profit warning of the year and especially its scale was an ice-cold shower, although the risks were certainly known. We included a much more cautious scenario in our forecasts due to the prolonged inventory problems of the company’s largest customer.

We have examined longer-term ROIC, components of return levels and underlying explanatory factors of Incap, Scanfil and four other Nordic electronics industry contract manufacturers. Overall, the companies’ return on capital has been at an excellent level and strengthened during our review period.

We examined the revenue growth and acquisitions of six Nordic contract manufacturers over the past 4.5 years. Since 2018, the companies’ revenue growth has been at a fierce level (combined revenue grew by some 19% p.a.). Part of the growth is explained by the numerous acquisitions made by the companies, but organic revenue growth has also been strong (total organic revenue has increased by over 10% p.a.).

We made no changes to Incap’s near-term earnings estimates after the Q2 report. The inventory adjustment related to the largest customer depresses the company's result to a clear downward trend at least in H2, but we do not consider the problem structural.

Incap reported their Q2 result today. Incap's largest customer announced that it would have to temporarily reduce its orders due to overstocking. Company's focus has been on new customer acquisition, increasing sales to existing ones and opening up new opportunities through an acquisition in the USA.

Incap announced yesterday it has acquired the US EMS company Pennatronics. We find the acquisition strategically good and also believe the acquisition price is quite reasonable.