Absolutely, it’s peaceful to own this company. Take a comparison to Kemppi, for instance—they also gave cautious guidance there, but unfortunately in the wrong direction.
Inderes sniffed out the positive profit warning, and props to them for daring to put it out there. Especially since they’ve been criticized lately for overly positive forecasts.
Yep, this warning was not a surprise and was factored into the forecasts reasonably well. It is worth noting, though, that Incap provides guidance for reported, not adjusted, operating profit. Regarding reported operating profit, there is now a 5% improvement in the forecasts. Incap’s fairly early warning is nonetheless a positive signal, which is further highlighted by the fact that peers Scanfil, Note, and Kitron have issued (slightly) negative warnings during the summer and/or given somewhat sour comments about the short-term market situation.
Here are some quick comments from inderesTV.
Mr. Viljakainen’s preview for Incap’s Q2 report release on Friday, July 26. 
Incap Group’s half-year report for January–June 2024 will be published on Friday, 26 July 2024 at approximately 9:00 a.m. EEST. The Finnish and English reporting materials will be available on the company’s website at Raportit ja esitykset - Incap Oyj at that time.
The company will hold a webcast in English on Friday, 26 July 2024, starting at 11:00 a.m. EEST. The results will be presented by Incap Corporation’s President and CEO Otto Pukk and CFO Antti Pynnönen. In addition, David Spehar, Managing Director of Incap Electronics US, will provide an update on Incap’s US operations via video.
The live webcast can be followed at Incap Q2 Interim Report 2024. During the event, the audience can ask questions through the chat at the aforementioned address. A recording of the webcast will be available on the company’s website at Raportit ja esitykset - Incap Oyj later that day.
Questions can also be directed to the company’s President and CEO Otto Pukk here on the Inderes discussion forum. The answers will be published on the company’s website and in this discussion thread.
Nordea’s analysis.
@Passi’s observation regarding Incap’s largest customer.
https://x.com/passiowns/status/1815666515745595811
A very good and interesting observation indeed. You can clearly see from the trend how Victron’s sales have correlated with this graph during the exact periods when sales skyrocketed or stalled, having a direct proportional impact on Incap’s figures and share price. The situation is compelling in the sense that Victron no longer plays as significant a role in Incap’s revenue as before; instead, revenue has been bolstered by other customers and the Pennatronics acquisition. It will be interesting to see Victron’s impact on Incap’s figures in the coming quarters.
Tomorrow we will indeed get to enjoy the second-ever Incap live stream, so even those of you on holiday, set your alarms before nine to make sure you join us online. 
Incap Corporation | Stock Exchange Release | July 26, 2024 at 09:00:00 EEST
April–June 2024 highlights
Revenue for the second quarter of 2024 amounted to EUR 57.6 million (4–6/2023: EUR 56.4 million) of which EUR 9.0 million was attributable to US business acquired in July 2023. Year-on-year increase was 2.1%. Excluding the impact of the company’s largest customer, revenue grew 30.2%.
Revenue grew 12.2% quarter on quarter.
Adjusted operating profit (EBIT) was EUR 7.0 million (EUR 8.3 million) or 12.1% of revenue (14.7%). Year-on-year decrease was 15.7%.
Operating profit (EBIT) was EUR 6.8 million (EUR 7.5 million) or 11.7% of revenue (13.3%). Year-on-year decrease was 9.9%.
Net profit for the period was EUR 5.1 million (EUR 5.7 million).
Earnings per share were EUR 0.17 (EUR 0.19).
January–June 2024 highlights
Revenue amounted to EUR 109.0 million (EUR 129.1 million) of which EUR 18.5 million was attributable to US business acquired in July 2023. Year-on-year decrease was
15.6%.
Excluding the impact of the company’s largest customer, revenue grew 34.2%.
Adjusted operating profit (EBIT) was EUR 13.2 million (EUR 19.8 million) or 12.1% of revenue (15.3%). Year-on-year decrease was 33.4%.
Operating profit (EBIT) was EUR 12.7 million (EUR 18.8 million) or 11.7% of revenue (14.6%). Year-on-year decrease was 32.2%.
Net profit for the period was EUR 10.0 million (EUR 14.1 million).
Earnings per share were EUR 0.34 (EUR 0.48).
Unless otherwise stated, the comparison figures refer to the corresponding period in 2023. This business review is unaudited.
Key figures
| EUR million | 4-6/24 | 4-6/23 | Change | 1-3/24 | Change | 1-6/24 | 1-6/23 | Change | 1-12/23 |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 57.6 | 56.4 | 2.1% | 51.4 | 12.2% | 109.0 | 129.1 | -15.6% | 221.6 |
| Non-recurring items | 0.1 | 0.7 | -87.8% | 0.1 | 19.0% | 0.2 | 0.8 | -80.6% | 1.1 |
| Operating profit (EBIT) | 6.8 | 7.5 | -9.9% | 6.0 | 12.9% | 12.7 | 18.8 | -32.2% | 28.2 |
| EBIT, % of revenue | 11.7% | 13.3% | 11.7% | 11.7% | 14.6% | 12.7% | |||
| Adjusted operating profit (EBIT)* | 7.0 | 8.3 | -15.7% | 6.2 | 12.7% | 13.2 | 19.8 | -33.4% | 30.6 |
| Adjusted EBIT*, % of revenue | 12.1% | 14.7% | 12.1% | 12.1% | 15.3% | 13.8% | |||
| Net profit for the period | 5.1 | 5.7 | -11.1% | 4.9 | 2.3% | 10.0 | 14.1 | -28.8% | 19.8 |
| Equity ratio | 63.0% | 65.1% | 62.2% | 63.0% | 65.1% | 60.6% | |||
| Net gearing | -5.9% | -1.6% | -5.3% | -5.9% | -1.6% | -7.7% |
Some elements that instantly catch my attention:
"In the first half of 2024, four biggest customers contributed to 52.6% (68.0%) of revenue. Out of the total customer base in January–June 2024, 20 customers (16) exceeded EUR 1 million revenue. "
“Incap has no business operations and no direct or indirect customers or suppliers in Russia, Belarus or Ukraine.”
"The Group’s cash position during the reporting period was good. On 30 June 2024, the Group’s cash and cash equivalents totalled EUR 39.8 million (EUR 15.7 million) and the company had unutilised credit lines amounting to EUR 8.0 million (EUR 7.3 million). "
CEO Otto Pukk interviewed by @Pia_Maljanen regarding Q2 
According to the positive profit warning guidance, EBIT would be at the same level as last year. Does this mean euros or percentages? I think they tried to ask Pukki this at the start of the interview, but he didn’t give a direct answer. Later during the interview, he mentions that the Q2 EBIT was 11.7%, which is quite a decent level. So, if the guidance reflects the EBIT%, the full-year result would be higher than last year as revenue grows.
Ugh, Incap really took a nasty hit in the closing auction (-7.53% —> €11.29). I bought a position in Incap before the positive profit warning at €11.31, and now it’s dipped slightly below that.
I want to believe that some people were just taking profits, and that before long, we’ll start heading back up gradually.
Renki is, however, delivering commendable results and growing both organically and inorganically, with the exception of 2023, when there was still too much reliance on the largest customer, who slammed on the brakes completely following inventory build-ups as the component shortage began to ease. Now, the customer base has expanded, and as a result, the risks have also diminished. It’s cheap at these prices.
Sure, the master outsources their own risks to the hired hand. And there’s no denying that the ride is rough for the contract manufacturer if the demand for the master’s goods doesn’t pull as anticipated.
But there is demand for contract manufacturing services, and the best ones thrive. The likes of Aspocomp are a different matter. Additionally, one could assume it’s in the major customer’s interest for a reliable hired hand to also succeed. Strategic partnerships can also arise. However, I don’t deny that the subcontractor’s position is still quite vulnerable in such situations.
I believe Incap has learned a lot from the 2023 Victron collapse, and the company is likely doing its best to diversify its customer base. But it really seems that if you become an owner of a contract manufacturer, you shouldn’t expect a smooth and steady ride.
And doesn’t the equation also work the other way around: the best contract manufacturers can land new, juicy orders overnight?
Edit: a couple of typos quickly fixed.
@ValkoinenPeura This has traditionally been the long-held view regarding contract manufacturers: margins are miserable and the position in the value chain is miserable. The companies are completely at the mercy of the markets and customers. Large firms can squeeze margins to nothing because switching costs are low for them. From your message, I get the impression that your thinking is very strongly based on this idea.
I also thought this way for a long time, but in my opinion, that thinking is outdated today. Times have changed. As technologies become more complex, for example, Incap is already making such challenging electronics components that you don’t just switch a contract manufacturer like that on a whim. Product development is often done in quite close cooperation within the industry, unlike before. The industry has changed as technology has evolved, and I believe the value position of electronics contract manufacturers has clearly improved. This idea is generally supported by, for example, the development of fundamentals for electronics contract manufacturers operating in the Nordics over the last few years. @Antti_Viljakainen has discussed a broader outsourcing trend in his analysis, which has indeed appeared as a clear change compared to the industry’s history.
In this context, I don’t believe a P/E of 8 using a “normal earnings level” is a neutral valuation for Incap. A P/E of 8 is a neutral level for a company that isn’t growing and has a poor return on capital. Neither of these apply to Incap.
Pukk neatly dodged the question regarding EBIT. Personally, I interpret it as talking about guidance in euro terms, and a small back door was left open for another positive profit warning regarding EBIT.
Based on my own gut feeling, if a profit warning comes, we will be at the upper end of the revenue guidance (10-20%), which could lead to around 10% growth in EBIT. I don’t believe a positive profit warning will be issued for 0-5% growth in operating profit; instead, that would be interpreted as being at last year’s level. 
Regarding the guidance, a question was asked in the webcast about what the % range is when revenue is now estimated to be higher than the previous year. The answer was—unless I misheard or the transcript is wrong—that “higher means 0-20%,” which sounded a bit jarring to me.
It is unlikely they would guide for “higher” with a zero-growth outlook, though. Inderes’ forecast for revenue growth before the latest report was 6%.
Companies are obligated to report their internal guidance ranges to the Financial Supervisory Authority (FIN-FSA), and at least previously, the interpretation has been that Incap uses a 4-tier scale: “at the same level,” “higher,” “clearly higher,” and “significantly higher.” And vice versa.
The wording and interpretations of the relative change each category contains have, if I recall correctly, varied somewhat in recent years. At least previously, “clearly higher” was interpreted to mean 20-40% growth and “significantly higher” more than 40% growth. And when the guidance at the start of the calendar year was “at the same level or higher,” the interpretation was growth of less than 10%, and when it was later narrowed down to “higher” (i.e., “at the same level” was removed), it was interpreted as growth of up to 20%. This was how it worked before, and it should be noted that these likely refer to the result (EBIT). Revenue may have a different scale.
The tiers and ranges could well have changed from the past. So, do not take this as 100% fact. It would be easiest if the company explained these clearly, or provided guidance with a range, narrowing it as visibility improves toward the end of the year.