Yesterday, OHB released the strongest Q1 result in the company's history.

Q1 total sales increased to € 202m (11.5% yoy, eNuW: € 174m), mainly driven by the core segment Space Systems with 155m sales (+8.3% yoy, eNuW: € 146m), but also by the continuous production of rocket components for Europe’s Ariane 6 launcher in the segment Aerospace (€ 28.1m sales; 18.6% yoy; eNuW: € 25m) and by Digital with € 25.3m (5.4% yoy; eNuW: € 27m).

EBIT came in below our estimates at € 12.5m (9.7% yoy; EBIT margin: 6.2%, - 0.1 pp yoy; eNuW: € 14.4m) due to higher than expected OPEX (€ 16m), containing one-off consulting & legal expenses. For FY23e, we expect margins to average at 6.5%, as OPEX should decrease to levels of € 10-14m per quarter.

Apart from that, OHB teamed up with Europe’s space players Airbus and Thales Alenia Space in an industrial consortium last week in order to bid on the IRIS2 contract (Infrastructure for Resilience, Interconnectivity and Security by Satellite – secure internet constellation, c. 170 satellites) worth € 6bn. The contract is currently open for tender by the EU, but as there is hardly any competition, we see a 99% chance for this consortium to be awarded the contract. The ITT (invitation to tender) should come out by the end of this month and the contract be awarded within this year. OHB's part of this major EU flagship project should be positively shaping the company's future going forward.

Further positive newsflow could potentially come from a possible contract win of the SATCOMBw3 project (3^rd generation secure communication satellites for Federal Armed Forces of Germany), which is also currently open for tender and should be awarded this year, but also from many other space projects currently open for tender.

After having received a seasonally weaker order intake of € 91m in Q1 (eNuW; vs. € 17m in Q1 22 and € 96m in Q1 21), the order intake should increase significantly throughout the year, thanks to the promising contracts mentioned above. In total, we expect come € 1.3bn of additional order intake for FY23e (1.2x book-to-bill), implying a strong order backlog of € 2.2bn at the end of the year.

BUY with an unchanged PT of € 48.00, based on DCF.