Product Expansion: I-Tech's antifouling agent, Selektope, has been integrated into the product portfolios of six major global paint manufacturers, with ongoing development in others. This broadening adoption indicates a growing market acceptance and potential for increased sales.cr.abgsc.com
Total addressable market (TAM) between USD 350 million and USD 500 million. i-tech.se
Kicker would be that the EPA in the US initiates the review process for selectope opening up an new market.

Revenue Projections: Assuming continued adoption of Selektope by major paint manufacturers its expected that growth will continue Historical levels with an initial increase and leaveling off as law of large numbers kicks in. For reference revenue CAGR for historical periods:
- CAGR 3 years: 25.6%
- CAGR 5 years: 29.8%
- CAGR 7 years: 30.1%
It is assumed the growth rate will qualify at the midpoint of 25-30 % CAGR. 27.5 % is assumed in the model.
Profit Margins: Profit margins have historically been at an average of:
- Last 3 years: 15.8%
- Last 5 years 9.5%
- Last 7 years -6.1%
It seems like that company hits operating leverage at around 65 mSEK, after which the margins starts to scale as evidenced below (adjusting for one offs in 2022). It is assumed the margin will continue to increase from todays 24.5% (Q1 25 margin) to 26% (current 3 year CAGR on net profit margin is 10.4%) as the revenue grows and costs for regulatory process disapates (however the regulatory costs will reamain during this year). A net profit margin of 26% is assumed in the model.

Regulatory Challenges: The renewal process for Selektope's approval within the EU presents a significant risk. Any unfavorable decisions or delays could impact sales in European markets and potentially influence approval process in other regions (North East Asia).
Market Dependence: A substantial portion of I-Tech's sales is concentrated in the Asian market, particularly with major customers like Chugoku Marine Paints. This reliance poses a risk if market dynamics shift or if there's a downturn in these regions.storage.mfn.se

Given the sizeable market size I assume the company can defend a 22-27 PE ratio also going forth, assuming the growth rate will not decline in the commings years.
Discount rate --> 9% due to the small size of the company and high customer dependence - CMP accounted for about 80% of total sales. However, in 2024 the customer base has diversified—with over one‐third of total sales now coming from other companies. The regulatory process will not affect the short term discount rate as the outcome will have little to no impact on the short/mid term revenue, (but may have in the long term, e.g. 2029 when Korea will renew Selectope approval)

Top-Line Growth: Monitor quarterly revenue figures to ensure they align with the projected 26% growth trajectory (over time). Consistent revenue growth is essential for meeting long-term financial targets.
Cash Flow Management: Despite the significant increase in sales, operating cash flow remained relatively flat, with SEK 35.17 million in 2024 compared to SEK 35.14 million in 2023 (despite the growth in earnings). This stagnation suggests that increased revenues are not translating into proportional cash flow improvements. This needs to be improved over time.i-tech.se

I-Tech's Selektope Expansion Will Drive 28% Revenue Increase in 5 Years

Shared on10 May 25Fair value Decreased 33%