ÅAC Microtec — Space to manoeuvre

ÅAC Microtec is well positioned to pursue its strategic ambition to become the leading provider of satellites, systems and services in the small satellite market, leveraging off the key elements of developing micro technology capabilities and reducing costs of development, launch and operation. Small satellites are those weighing less than 500kg, compared to larger traditional satellite platforms that typically weigh up to around four tonnes. As an emerging technology that is set to reduce costs of deployment, operation and ownership for customers, the small satellite market appears set for strong growth. ÅAC’s focus will be on satellite platforms weighing less than 50kg and subsystems for satellites up to 150kg.

The market for small satellites is expected to grow rapidly over the next decade. Around 7,000 may be launched in that period as the market transitions increasingly towards proposed LEO satellite constellations, especially by communications customers, which should be a key driver of growth. A major facilitator should be an increasing number of launch vehicle options that are expected to reduce launch costs substantially compared to current models. Several are expected to be suited to LEO small satellite payloads. A feature of LEO deployments is the shorter operational lifecycle of about five years before a satellite exits orbit, which should lead to a growing stream of replacement deployments, providing an opportunity for customers to insert new technologies and capabilities.

Since deciding to focus on the space market in 2014, ÅAC has listed on the Nasdaq First North exchange in Stockholm. In January 2018 it made its first transformational acquisition, Glasgow-based Clyde Space for SEK376m, a leading designer and manufacturer of CubeSats, as well as subsystems for third-party platforms. CubeSats are 10cm cubes packed with technology (1U) that can be added in modular series to form 1U, 3U or 12U satellite packages weighing up to 20kg including solar panels for power. Clyde extends the product range offered by ÅAC, allowing end-to-end solutions for customers from inception to replacement. The space industry credentials of its experienced executives also strengthen the operational management of the merged entity.

The rapid pace of technological development in the satellite market has resulted in smaller, lighter components and subsystems with improving capability. The modular CubeSat configurations were initially developed for academic purposes over the last two decades, providing nanosatellite technologies that weigh less than 10kg. The increased number of commercial applications these afford is likely to be significant. Due to international regulatory agreements concerning transmission of bandwidths, it is unlikely to replace the dominant geostationary earth orbit (GEO) satellites that provide the bulk of communications services delivery around the world. However, an offering of a lower-cost alternative to customers seeking a dedicated satellite network with potential for global coverage through a constellation of LEO satellites is likely to be compelling.

There are many risks in the successful execution of the strategy, including the notorious deferrals and delays apparent in many space programmes. With five successful platform deployments in FY18 and a growing pipeline and backlog, ÅAC seems set to fully participate in the market development. With Clyde already largely invested to deliver a significant increase in satellite deployments and subsystem deliveries, ÅAC should now move into a profitable growth phase, with improving cash flows as it drives down unit costs and leverages its cost base. Our capped DCF valuation, generated by core assumptions driving compound annual net sales growth of 30% from 2020 to 2024 to SEK661m with EBITDA margins of c 26%, indicates a value of SEK14.7 per share.

Formed in 2005 as a spin out from the Ångström Laboratory at the University of Uppsala in Sweden, the company was initially known as Ångström Aerospace Corporation and involved in the development of high-quality avionics products using microelectromechanical systems (MEMS). In 2015 the decision was taken to outsource loss-making MEMS production and focus on the commercial development of the space components and subsystems including the aspiration to build complete small satellites and networks. As a result, ÅAC Microtec has developed into a world leader in the design, development, deployment and operation of small satellites and networks, in addition to supplying technological components and subsystems to larger satellite systems.

ÅAC was listed on the Nasdaq First North market of the Swedish Stock Exchange on 21 December 2016. Fouriertransform, a wholly owned subsidiary of Swedish venture capital company Saminvest, formed by the Swedish state to invest in domestic businesses, invested SEK25m in the company in 2014 and holds a 14.4% share today. The company raised SEK120m from the listing, enabling it to pursue both organic opportunities as well as strategic M&A. In October 2018 management stated its intention to move the listing to the Premier segment of the Nasdaq First North market by the end of Q119 as a precursor to a main market listing in Stockholm.

In January 2018 the company acquired Clyde Space, based in Glasgow, Scotland, for SEK376m. The deal was funded by the issue of 30.5m shares at SEK11.62 per share to Clyde shareholders and £2m (SEK22m) of cash. Following the deal, ÅAC also raised SEK50m before expenses through a placing at SEK7.65 per share. As a result, Clyde shareholders own around 44% of the enlarged share capital of the group. The merged company, now called ÅAC Clyde commercially to reflect the combined offering, will operate through two business segments, Satellite Platforms & Space Systems and Subsystems & Components. The company also enters licensing agreements for its technologies to third parties.

ÅAC employs around 25 staff primarily at its Uppsala facility, and generated revenues of SEK25.6m from subsystems sales and licence income last year. Clyde employs around 60 people at its main site in Glasgow. In FY18 Clyde added around SEK60m of revenues to the group in its 11 months of consolidation. The large majority of employees are highly qualified engineers providing a comprehensive design and development capability for customer requirements. Around 70% of revenues generated come from repeat customers, suggesting recognition of the quality, reliability and performance of the company’s components and systems. A business development team follows up leads from both Glasgow and the UK space agency in Harwell, Oxfordshire. As the industry is relatively small the profile of the executive team also generates introductions, especially from potential customers seeking to enter the market for the first time. Clyde has also developed high-quality manufacturing capable of delivering 10 satellite platforms a month, a rate of production that may not seem spectacular but is a transformation when compared to traditional satellite manufacturing. It also has vibration, thermal cycle and environmental testing facilities on site as well as a network ground station. Radiation testing is outsourced to a facility in Uppsala.

The company’s declared strategy is to dominate the market for small satellites between 1kg and 50kg in weight. To do so it will develop and build small satellites as well as advanced and standardised but mission critical avionics and subsystems. It offers an end-to-end satellite solution to potential customers from system and satellite design, manufacture and launch to operation. It also intends to continue to develop and supply subsystems and components that can be used aboard third-party small satellites as well as larger satellites, while maintaining strong relationships with global space agencies.

The key elements to delivering this strategy are likely to include:

ÅAC Clyde has the opportunity to provide solutions and the offer of satellite as a service is a good example of how the company can bring its industry expertise to allow non-space players into the market. Just as software as a service has become an established way of working today, satellite as a service would allow the users to focus on business delivery while ÅAC Microtec provides access to the space economy and ecosystem.

Successful execution of the strategy should drive strong growth in revenues from increased delivery volumes of platforms and subsystems, which should be further enhanced by the development of an increasing services revenue stream as the deployed satellite fleet grows.

Key to the growth of the group is the development of the small satellite market. Small satellites is a collective term given to all satellites that weigh up to 500kg. The segment can be broken down into the following defined sub-segments:

ÅAC Clyde’s initial focus will be on the nanosatellite and microsatellite segments.

Historically the length of platform construction and deployment periods, prohibitive costs and a lack of available launch options have all been significant barriers in the traditional satellite market. While cost against capability has progressively improved at a fast rate, the overall market structure has been little changed in recent decades. The emergence and development of microtechnology has provided the opportunity for a step change in the provision of satellite services. CubeSats in particular continue to develop from the base established for academic and research purposes. Technology has developed to include sufficiently powered measurement instruments and radio transmitters to perform functions previously carried out by much larger platforms. The challenge has been to fit ever-improving capability into the same standardised and constrained configurations and both ÅAC and Clyde have been at the forefront in this regard. The modular nature of CubeSat design allows increasing payloads as the key control and operational systems may comprise only up to 2U of a 3U, 6U or 12U platform.

Demand for space-based information remains the fundamental driver, with lower costs and increased capabilities of small satellites providing new alternative solutions, especially through constellation configurations covering the globe with up to 200 satellites. Indeed, the prospect of megaconstellations of over 1,000 nanosatellites proving reliable real-time connectivity for higher-bandwidth communications customers is increasing. Commercial customers especially in the communications segment are expected to be the main driving force for satellite deployments, with applications expanding as technical capabilities increase. The development of the market is expected to be facilitated by an increasing number of new lower-cost launch systems as well as availability of venture capital support for space-based ventures.

The essential selling point of the small satellite proposition is cost effectiveness. The satellites are cheaper to manufacture with a standard 1U CubeSat costing around SEK1m, and launch costs that may range from around SEK100k/kg to SEK750k/kg (ie from c SEK1m for a 1U nanosatellite). Even a relatively large constellation deployment is likely to be less expensive than a standard GEO platform costing several hundred millions of dollars.

The smaller scale means the testing equipment is less capital intensive and transportation logistics (for test and to launch centres) are easier and lower cost, often by secured courier services. In addition, small satellites are simpler with replication of designs within constellations allowing designs to be optimised for manufacture and test with a positive impact on unit costs. It should be noted that operational control may be more complex as the multiple satellites in a constellation have to be acquired by ground stations as they pass. However, being closer to earth in LEO also means better signal strength, requiring less power for transmission compared to larger GEO satellites. The proximity to the ground also reduces the requirement for shielding.

Modularity provides increasing and flexible payload capacity, which should allow previously unattainable applications to be adopted. The shorter service life of up to five years should also enable spiral upgrades of technologies deployed, as well as providing a growing replenishment stream for the manufacturers.

Erik Kulu’s Nanosatellites & CubeSat Database (www.nanosats.eu) identifies 1,116 nanosatellites launched through 2018 by 61 countries, of which 1,030 have been CubeSats, with 932 successfully deployed. Of the total launched, 86 have been lost to launch issues, which represent only a few mission failures given that the record for the largest single deployment was via an Indian launch with 103 nanosatellites aboard in February 2018. However, only 576 are operational as around 25% have re-entered the atmosphere, and a further 15% remain in orbit but are non-operational.

After only 80 launches between 1998 and 2009, the number being deployed has increased dramatically is expected to continue growing, as Exhibit 5 shows. According to the forecast in Exhibit 5 below more than 3,000 satellites are to be deployed over the next five years.

The forecasts of the number of nanosatellite and microsatellite deployments appear to be starting to converge. Most indicate that from around 250 deployments in 2018, and a trailing five-year average of around 175 per annum, there is likely to be strong growth to more than 500 per annum by 2023 if not sooner. Growth is expected to continue through the next decade at 10–15% per annum.

According Euroconsult’s Prospects for the Small Satellite Market, 2018 report, 7,000 smallsats are expected to be deployed over the next decade (2018–27), compared to the previous year’s 10-year forecast of 6,214, a 15% increase. It is almost double the 2016 forecast of 3,600 small satellites, reflecting the rapid development of the market and potential for constellation deployments for new applications as technologies advance. According to the Satellite Industry Association, satellite manufacturing sector revenues were around $15.5bn in 2017. We estimate that only a small proportion (<$1bn) of that was in the microsatellite and small satellite sectors despite the increasing volumes due to low values. We expect this to grow to around $2.5bn to $3.0bn by 2023, assuming 700 or so deployments at around $4m each.

The end-market adoption of the small satellites technologies is also expected to change the landscape of the market. Telecommunications customers are expected to provide the greatest growth as they start to exploit the new propositions offered. The general expectation is that telecoms operators, including military applications, will account for 50% of small satellite deployments over the coming period, which compares to less than 10% in the previous decade. The number of academically based research and earth observation satellites should continue to grow, but from higher bases at a slower overall pace, as will military and security deployments.

Customers such as Kepler Communications and NSLComm are clearly involved in the communications segment providing ÅAC Clyde with likely exposure to its growth. Given Clyde’s overall historical market-leading position, its participation in the wider market expansion seems likely.

Apart from the existing traditional fixed and mobile satellite service offerings, which should continue to dominate in areas such as Ku-band and Ka-band frequency high-throughput data transmission, there are a number of emerging companies in the small satellite market. As the concept is relatively straightforward, despite comparatively high technical barriers to entry, we see new potential manufacturers emerging from previously unrepresented countries. Of course, ÅAC Clyde and some of the other major players have operational experience and industry credentials that should provide a competitive advantage. Major competitors include, but are not limited to:

In addition, ÅAC Clyde also continues to work with some of the world’s leading space agencies. In addition to those in Sweden and the UK, it also collaborated in 2017 with NASA, the European Space Agency (ESA) and the Japanese Space Agency, JAXA.

The rationale for the acquisition of Clyde Space is clear as it makes the combined company a leading player in the small satellite segment, offering end-to-end solutions to customers. The purchase of Clyde extended the product offering into the nanosatellite category, which is expected to be a highly disruptive segment in the offering of LEO satellite constellations. The development by ÅAC in collaboration with OHB Sweden of InnoSat, a 40kg satellite platform using ÅAC’s Sirius avionics subsystems, is now joined by Clyde’s leading position in CubeSat manufacturing and subsystems supply. These are 10cm cubes (1U) packed with microelectronics and power systems that can be modularly expanded to form 3U, 6U and 12U satellite packages weighing from around 1kg up to around 20kg. They provide a disproportionately favourable increase in payload capacity, as less than 2U of a configuration is typically used for mission subsystems.

ÅAC Clyde also benefits from the integrated range of subsystems and components available for both its own and third-party satellite systems, including larger platforms. These are standardised avionics products that are lightweight, compact and robust, providing the platform (or bus) on which the customer payloads can be deployed into orbit. ÅAC’s range may be characterised as slightly more bespoke and premium than those of Clyde, with two main computer management product series, RIA and the newer range, Sirius. The latter is a modular design that was launched at the end of 2016 aimed at providing reliability, capacity and high performance for microsatellites. However, the wide range of missions means that there is a certain element of customisation for every application. The group product range includes onboard computers (OBC), battery modules, electrical power systems (EPS), attitude and orbital determination and control systems (ADCS/AOCS) and data management systems. Solar cells for arrays and cables are bought in and integrated into the systems, as are a range of other components.

Having focused on its strategy of providing standardised products for the segment, ÅAC Clyde now has a presence on an estimated 30–40% of already deployed CubeSats with over 2,000 components and subsystems delivered, providing an outstanding validating installed base. A large part of this was for the provision of subsystems for the Spire satellite constellation.

To date the delivery to launch of complete satellites has been more limited. Clyde’s first nanosatellite platform (UKube-1, a 3U design) was launched in 2014 and was the UK Space Agency’s first national spacecraft, successfully deployed with four payloads on board and achieving a number of significant milestones for the UK industry.

The focus over the next few years was on supplying subsystems to third-party projects, primarily for Spire’s current operational constellation of 72 Lemur-2 satellites. Out of around 95 launched to date, 10 were lost on a launch failure and the others have re-entered and burnt up. A further 45 or so are expected to be launched by the end of 2019, with a few deployments in 2020.

While Spire developed and manufactured its own satellites, the deployment of the constellation is an example of how a constellation may develop. After a few initial test satellites in 2014 Spire launched its first four operational Lemur-2 3U CubeSats in 2015. Volumes subsequently ramped up and in future years are likely to be limited to replenishment of the constellation after five-year deployment lifecycles.

A further example of a potential roll-out comes from another of Clyde’s customers, Kepler Communication of Canada. Kepler is developing a constellation of ultimately 140 satellites to provide communications and global data backhaul services for wideband and internet of things applications and in the longer term to provide in-space connectivity. These will be deployed in LEO on polar planes (unlike GEO orbits, which are essentially fixed above the equator). On the polar orbit one satellite can see all of the planet, but a large number are required to provide real-time connectivity. Clyde is building all of the three satellites ordered by Kepler to date.

On 15 November 2018, Kepler was one of four companies offering NGSOs (non geosynchronous orbit) satellite systems that received FCC (Federal Communications Commission) approval to deliver satellite communication services to the US market. The approval paves the way for the constellation deployment. GEN-1 satellites are due to be launched in 2020, so we expect the first constellation order in 2019, with Clyde appearing to be in a strong position to supply them.

Exhibit 8 demonstrates ÅAC Clyde’s position in the satellite supply chain.

ÅAC Clyde saw five of its CubeSat platforms successfully launched in 2018:

Clearly as customers such as Kepler and NSLComm seek to deploy their constellations, the number of CubeSats to be supplied by Clyde should grow rapidly, with replenishments five years after launch providing a sustainable longer-term potential. With annual nanosatellite deployment expected to more than double to over 500 by 2021, even full production at Glasgow of 120 nanosatellites would represent a <25% market share.

As ÅAC and Clyde integrate and leverage their combined expertise in standardised microtechnology solutions for space applications, we expect the group to consolidate and grow its market position. Primarily from its base in the heart of Glasgow, Clyde already has the capability to take a project from launch to replenishment. It offers mission design, platform and systems development, manufacturing, test and evaluation, launch planning, deployment and commissioning as well as operational services from its ground station. Radiation testing can be carried out at third party facilities in Uppsala, and as service provision increases we expect Clyde to create a global capability by leasing ground station capacity around the globe.

In addition to launches, 2018 saw a significant increase in pipeline conversion activity, both for platforms as well as subsystems:

Despite the recently announced departure of the CEO, there should be little disruption to the strategy. Mats Thideman, who has held the role of CFO since 2014 and was interim CEO of ÅAC before Alfonso Barreiro took office, has stepped up to managing director. Mats has extensive industrial experience at Åkerströms, Image Systems, TracTechnology and most recently Cortus Energy. Together with Chief Strategy Officer and Clyde Space Founder Craig Clark, he will lead the executive team while the search for a new CEO is undertaken. As CEO of Clyde Space, Craig has been involved in its strategic development since it was founded in 2005 and has been CSO of ÅAC Clyde since the merger. Craig Clark and ÅAC’s Chief Technical Officer Andrew Strain add substantial ‘new space’ experience to the operational board. Andrew has over 10 years of experience in the design, development and delivery of small satellites, having been with Clyde almost since inception.

Apart from the normal strategy execution risks, the following are some of the key sensitivities for the company. This list is not exhaustive but aims to highlight some of the issues involved not only in operating in the space arena but also in coordinating and managing day-to-day operations following a significant merger.

As part of its more international outlook following the Clyde purchase and in advance of moving to the Nasdaq First North Premium market segment in Stockholm, ÅAC has adopted IFRS accounting standards for its reports from FY18.

The major element of change under IFRS is that goodwill is no longer amortised and is reduced by purchase price allocation (PPA) intangibles acquired with Clyde, including customer relations, trademarks, software and backlogs. These assets are amortised over their expected useful lives and tested annually, but have no impact on future cash flow. We therefore exclude the amortisation from our adjusted figures and treat it as exceptional alongside impairments of other fixed and intangible assets.

Internally generated intangibles such as capitalised R&D continues to be amortised separately and taken as a charge to profits, with own work capitalised added to group income.

As can be seen, FY18 was one of transformation for ÅAC Microtec following the effective merger with Clyde Space. As it transpired the guidance given early in the year for revenues in excess of SEK85m for FY18 and a positive Q418 EBITDA were both readily achieved.

The highlights of the trading performance in 2018, the first to be reported under IFRS, include the following:

The purchase of Clyde Space with full year sales of c SEK60m completed on 30 January and has been consolidated since the start of February. This was funded by the issue of 30.5m shares at SEK11.62 per share to Clyde shareholders and £2m (SEK22.2m) of cash for a total consideration of SEK376m.

Following the deal, the balance sheet was strengthened by a targeted share placing that raised SEK50m before expenses through a placing at SEK7.65 per share. As a result, Clyde shareholders own around 44% of the enlarged share capital of the group.

While cash burn continued through the year, the performance was much improved in Q418 with a cash outflow of just SEK8.5m as EBITDA turned positive. Q218 and Q318 saw cash outflows of SEK15.0m and SEK18.1m, respectively. The Q118 outflow was SEK15.2m adjusting for the cash consideration for Clyde (SEK22.4m), the cash acquired with the business (SEK4.1m), and the proceeds from the Q1 capital raise.

Having more than achieved its guidance for FY18, ÅAC has provided little information with respect to the outlook. Similarly, we only have outline preliminary figures and not full disclosure of detailed financial elements. Nevertheless, we have developed a model based on some key assumptions.

We estimate that the number of microsatellites below 50kg set to be deployed globally each year should grow at a five-year CAGR of c 16% through 2023. We expect deliveries of subsystems from both Glasgow (nanosatellites/CubeSats) and Uppsala (microsatellites) to outperform this growth rate as new customers continue to be acquired. We expect revenue growth rates to be similar for each location as we assume higher volume growth with lower prices for nanosatellite subsystems equates to Uppsala’s more customised, lower volume, premium subsystems.

We expect ÅAC Clyde to deliver 15 satellite platforms this year including some larger 6U units.

The volume development is expected come from a mixture of development and test satellites as well as initial constellation requirements. We expect the latter to receive a first order this year and to start delivering in FY20, and to broadly equal the number of test satellites in FY19, which we estimate at 15 including some 6U platforms (eg Kepler’s TARS platform). The ramp up should then start to accelerate as more constellations are brought into the order book and commence deployment. From 2023, with an increasing number of satellites ending operational lifecycles, replenishment volumes should add to new deployments. A services revenue stream should also start to grow meaningfully once constellation commissioning has commenced. In addition, subsystems licensing agreements with other manufacturers such as York Systems and Ball Aerospace should provide a growing stream of royalties as they increase production volumes.

As the volume of satellites being manufactured increases, often with replication for the same constellation, there should be beneficial learning curve effects reducing the unit costs. In addition, a large proportion of bought-in components should benefit from improved pricing per unit on increased volume commitments.

After a relatively flat period in 2019 as the benefits of the integration of the two businesses are more fully absorbed, we expect staff numbers to grow to reflect the increase in deliveries. Our base assumption is that one 3U satellite construction takes about 1,500 hours, or effectively one fulltime employee a year. As progressive benefits from learning curve advances and product standardisation flow through, we would expect some increase in efficiency to be reflected in unit costs. In addition, we expect improved procurement prices as volumes rise.

As a result, we are forecasting that the company moves to a modest EBITDA profit in FY19 and a positive adjusted EBIT of SEK27.5m in FY20.

Using our previously stated assumptions, we expect to see rapid growth in sales from both the satellite platforms and subsystems segments. The acceleration in growth seen in FY20 is expected to come from the rapid increase in satellite deliveries as constellation deployments begin. We expect steadier growth from the subsystems activities as the market continues to expand. The satellite delivery assumption is thus the biggest risk to our estimates although it is possible the risk could be to the upside.

The increase in revenues should move the company towards an EBITDA contribution, and this could be possible in the current year, although our model indicates a SEK1.5m EBITDA loss for FY19. We note that even if satellite platform revenues were flat between FY19 and FY20, we would expect a modest improvement in EBITDA.

Our expectation for cash flow is therefore for a modest outflow this year, as profitability improves but working capital continues to expand to support growth, including increased inventory of standardised products. We expect a more significant cash inflow in FY20 and expect net cash to fall to SEK5.0m this year before rising to SEK24.0m in FY20.

It should be noted that ÅAC does have a SEK5m overdraft facility that remains undrawn, which provides a modest amount of financial headroom. Nevertheless, the margin for mishaps appears relatively modest and we would not be surprised to see a further capital raise in the relatively near future to underpin growth and provide further funds for strategic M&A.

The rapid growth of the group should mean that EV-based metrics fall rapidly towards more normal levels for space-based activities.

Capped DCF valuation

We calculate our DCF valuation using a forecast period of six years and then assuming zero terminal growth thereafter, with working capital neutralised to zero and capex normalised to depreciation to reflect that. We believe this is inherently conservative for growth stocks as they should outperform the terminal cash growth expectation. We utilise a calculated WACC in the calculation of 12%, where we adjust the equity risk premium to reflect risk. As ÅAC is a relatively immature model, we have used a 10% premium to a risk-free rate of 2%. The value we derive is SEK14.7 per share.

At the DCF value, the FY20 P/E ratio would 39.7x, but we would expect this to fall rapidly as revenue and profits grow as volumes ramp up.

There is no directly comparable quoted small satellite company that provides forward-looking metrics, as GomSpace is also in a commercial start-up phase. In our view, this means that a consideration of the valuations afforded to more established space equipment manufacturing companies in Europe and the US is the most appropriate and available.

However, it is worth noting that following its December 2018 rights issue, Gomspace is trading on an EV/sales multiple for 2018 of 4.1x, compared to just 2.5x for ÅAC.

ÅAC Microtec is still in the early stages of its commercial development and has yet to make positive returns, although we are forecasting modest positive EBITDA for FY19. As such, directly comparing traditional profit metrics is unhelpful at present. However, ÅAC Microtec is trading on an FY20e P/E of just 8.7x using our estimates, suggesting the company is trading at a 39% discount to its immediate space peers in Europe. Given its anticipated growth prospects this would appear to be anomalous, as we would expect ÅAC multiples to be at a significant premium in the near term to those of the peer group at this stage. The current share price does not appear to allow for the successful execution of the strategy and achievement of our forecasts. Clearly, there is some concern over a further funding round, but allowing for such a move, the opportunity looks attractive.

Alternatively, to match the 8.8x FY20e EV/EBITDA of the entire peer group, ÅAC’s share price would need to rise to close to SEK4.6 even on the immature level of profitability with our FY20 EBITDA estimated at SEK33.6m The anticipated pace of top-line growth should mean that the EV metrics continue to decline rapidly in the coming years if the strategy is executed as expected, implying significant opportunity. The rate of growth should become increasingly evident as 2019 and 2020 progress, which should be key in determining near-term fair value, as will longer-term, cash-based valuations.