Ceotronics: The upside signal is loud and clear; INITIATE with BUY - NuWays AG Research
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Ceotronics: The upside signal is loud and clear; INITIATE with BUY - NuWays AG Research

CEOTRONICS has already delivered what investors pay a premium for elsewhere in defence: 23% historical sales CAGR and a 21% EBITDA margin, close to INVISIO's 22%. SmG-related orders of c. €103m have turned a longstanding Bundeswehr relationship into business at scale. CT-ComLink helps protect that position: software updates let users retain their control units as radios and headsets evolve. Backlog of € 77.6m covers 1.4x annual sales, the strongest coverage among its direct peers. The next stage of growth comes at a substantial valuation discount.

A soft H1 could provide a misleading first impression. While H1 results are likely to look weak against a demanding prior-year comparison, third-batch SmG deliveries should drive a stronger H2. In fact, the FY 26/27 net profit guidance looks conservative: our € 6.8m estimate is c. 10% above guidance of € 6.2m, despite allowances for relocation and ramp-up costs. The non-recurrence of last year's impairment charges provides further support. The next major order and a potential guidance upgrade are catalysts for the valuation to catch up.

INITIATE with BUY, with a PT of € 17, based on DCF.
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