Topic: Nynomic should report strong Q4 prelims. More importantly, FY24e should be marked by strong sales growth and further margin improvements as well as additional (potentially larger) acquisitions.

Q4 sales are seen to come in at € 37.6m (+14% yoy; FY23e sales +4% yoy) thanks to confirmed call-off dates of formerly delayed orders and several new projects within structurally growing markets. This should partially compensate for the flattish top-line development during 9M. As a result of the expected strong sales figure and the ability to book high-margin development revenues (typically due towards the end of a year), the EBIT margin in the fourth quarter is seen to jump to 19.8% (+5.9pp yoy; FY23e margin +0.1pp yoy), thus reaching a new record high.

Returning to strong growth in 2024. For FY24e, we expect Nynomic to grow sales by almost 17% yoy. Besides consolidation effects from the acquisition of art photonics (3.8pp of FY24 group growth), the company is seen to reap the fruits from several products gaining traction. For instance, the first large order for Spectral Engines' TactiScan (handheld device to detect drugs) should contribute a mid single-digit million amount in 2024 alone (eNuW). Nynomic is also seen to show strong growth within its agricultural, semiconductor and medtech end markets.

Thanks to a positive operating leverage, so far loss-making businesses scaling up and a growing share of recurring and high-margin software revenues (related to hardware sales), Nynomic looks set to further expand its EBIT margin to 13.7% (+0.7pp yoy).

Additional inorganic tailwinds in the cards. As per its Buy & Build strategy, Nynomic should be looking to acquire 1-2 additional companies during the next six months, in our view. The focus of those transactions should lie on expanding its technology and solutions portfolio. Thanks to its inherently cash flow generating business model and the € 18.9m capital increase in May last year, the company should be equipped with sufficient financial firepower to be considering larger targets with up to € 20m sales.

This, coupled with expected organic double-digit sales CAGR during the mid-term (eNuW), bodes well with the company's mid-term targets of € 200m sales with an EBIT margin of 16-19%.

BUY with an unchanged € 54 PT based on DCF. Nynomic remains one of our top-picks for 2024.