We reinstate coverage of Midsummer with a new fair value of SEK 2.5–3.3 per share following its latest rights issue. This capital raise should allow the company to return to profitability in a controlled manner, which on our forecasts implies a breakeven in EBIDA in 2025. Our new estimate for 2025 EBITDA is SEK 1m (17m), while noting that the percentage change is significant. We now assign a lower fair value of SEK 2.5–3.3 per share (4.5–5.0) owing to the reduced sales forecasts for 2024 and the revised number of shares. Midsummer is on the brink of a substantial expansion in its business as the new factory in Italy is proceeding as planned, providing favourable conditions for the company to take a share of the structurally fast-growing European market for solar energy. At the same time, the SEK 175m contribution from the Italian state looks set to be paid out largely as planned. Risks remain high but will diminish as the expansion of the operations in Italy continues.

We now make a number of estimate changes. The most crucial are our lower sales estimates, as lower component prices for inverters and electronic parts take down the price of sold products as well as for purchased materials. On the margin, it is favourable, as this reduces investment costs for end-customers. At the same time, we have adopted a more rapid expansion of Italian production in 2025e, as the company focuses on its product offering on the B2B segment and flat roofs with flexible structures, an area where Midsummer stands strongest against competing products. The consumer market has weakened recently on account of higher interest rates, falling real wages, and normalising electricity prices, leaving the B2B market as the major driver of demand in the near term.

New valuation range of SEK 2.5–3.3 based on EV/S multiples