* Recovery confirmed as EE volumes ramp
* Sales in line, EBIT +19% vs. ABGSCe
* We raise '26e-'28e EBIT by 9-4%
Long-awaited EE acceleration now here
Q3 marked the start of the awaited EE ramp, with a return to y-o-y growth for the first time since Q2'24. Sales were in line with both the series production update released in October and our expectations. EBIT of SEK 15.4m was 19% (SEK +2.5m, +175% y-o-y) above ABGSCe, for a margin of 44.9% vs. our 37.6% (23.8% in Q3'25). The earnings beat was mainly driven by lower opex, as the company had lower personnel costs following a decrease in FTEs. Comps were easy, with H2'25 marking the trough, and Q4 should face a similarly undemanding base. The volume recovery was broad-based across end-markets and geographies. Aside from the anticipated commercial vehicle recovery, super-duty pick-ups (~25% of sales) started to support growth in the quarter. Engines for power generation (~5% of sales) benefitted from data centre capex, with OEMs such as CAT and Cummins providing a solid backdrop, although we note that this remains a low-volume market for SinterCast.
Lower opex and sampling cups lift EBIT
The strong recovery of the commercial vehicle sector and the ramp-up of new programmes, as well as the leaner cost base, lead us to raise our '26e-'28e EBIT estimates by 9-4% (~SEK 4-3m). Updated FX takes ~2% off '27e-'28e sales. We maintain our Q4 forecast of 3.5m EEs while raising our sampling cup volumes, as we expect sampling cup inventory to remain at a low level among the foundries. From our understanding, the strong Q3 figure is mainly related to consumption rather than stocking.
Valuation
We believe that the Q3 report confirmed the recovery story across several of Sintercast's end-markets. We are also intrigued about the upbeat commentary regarding M&A, which suggests that a transaction is in sight. The share is trading at 22x/13x '26e/'28e P/E vs. its historical median of 22x/14x.