Saab (OW) Over Kongsberg (UW)

Research evidence excerpt

Saab (OW) Over Kongsberg (UW)

IdeaMCompany targets suggest growth normalization may arrive sooner than the market

initially perceived. As mentioned above, Kongsberg’s new targets imply a slowdown from

32% sales CAGR25-29e to 11% in 2029-33, confirming the current growth phase is not

permanent. We acknowledge that Kongsberg’s core exposure to missiles and air defence is

well positioned within the current defence spending cycle. However, in our view, these

categories are benefiting from many of the same drivers as artillery: inventory rebuild,

higher readiness requirements and capability gaps. While these drivers may remain

supportive for several years, these are ultimately finite procurement cycles. Once missile

inventories are rebuilt, countries do not need to keep buying at the same pace, especially

as missiles are not consumed in training at the same rate as ammunition and their use in

conflict can be constrained by escalation concerns. Similarly, once air-defence country

coverage reaches an adequate level, procurement should naturally shift from capacity

build-out to maintenance, upgrades and selective replenishment. As highlighted in our

Global Primer note, we do believe the missiles and air defence is set to be a long-cycle.

The key question is not whether demand remains structurally supported, but whether

Kongsberg can continue to grow above the sector once the restocking wave normalises.

Management’s own 2033 targets suggest that this normalisation is likely to arrive sooner

rather than later, which makes the stock’s premium valuation further harder to justify if

growth beyond 2030 is broadly in line with the sector.

Capex acceleration, together with M&A, are underway to secure growth. To support