Heads-up for report 26 April

Global military spending grew 9.0% in 2023

Russia-Ukraine war continues to drive spending (R: +7%, U: +57%). Saab's strategic markets see growth: Sweden + 13%, Europe +20%. Growth to continue in '24 before normalising, but already priced in.

How long will the order momentum last?

We address investors' main questions regarding SAAB. We examine the order momentum endurance and margin potential. Good but seasonally weak Q1e: orders down 13%, sales up 16%.

Loses out on SEK 40-60bn submarine order

Dutch SEK 40-60bn submarine order awarded to French Naval Group. Likely limited impact on '24e-'26e consensus for Saab Kockums. Again calls into question Saab's ability to land “mega-deal” projects.

An indefensible position

We rate Saab a SELL with a TP of SEK 600, 30% below SP. Demand-surge will not fully solve margin and CF issues. Valuation does not reflect risk of investments and long-term projects.