Translation: Original published in Finnish on 06/09/2026 at 07:40 am EEST

Yesterday, we visited Incap's factory in Karlsfeld, Germany The Karlsfeld factory became part of Incap in the Lacon acquisition, which was completed in February. The company announced yesterday that orders for the former Lacon units developed surprisingly well.

The Karlsfeld factory is probably the largest of the units that came with Lacon

In the Lacon acquisition, completed in February, Incap acquired three factories in Germany and one in Romania. In our assessment, the Karsfeld factory is clearly the largest of the factories acquired with Lacon, as its floor area and number of employees account for about half of the former Lacon entity. However, the Karlsfeld factory is also a unit focused on small and demanding production series, whose strengths are likely in quality, complex and difficult-to-automate products, flexibility, and proximity to markets. Correspondingly, cost competitiveness for larger production batches is limited. Incap has not numerically disclosed the customer structure that came with Lacon, but as the largest unit, Karlsfeld operates, in our estimation, in Lacon's key customer segments, such as the railway sector in the defense industry, medical devices, and electric vehicle charging systems.

In addition to manufacturing operations, Karslfeldt also has service and brokerage businesses

In addition to the actual electronics contract manufacturing operations, Karlsfeld also has a development and design service business as part of its production deliveries, as well as a third-party product brokerage business. We believe that the company in Karlsfeld would have design and development service capacity to serve customers of Incap's other factories, and strengthening the service side (especially ODM) was a key part of Incap's strategic rationale behind the acquisition. Brokerage sales, on the other hand, are likely to be lower-margin than contract manufacturing, but they can also open up opportunities for the production side in the longer term, and brokerage activities do not tie up much capital. Thus, we warrant retaining this likely rather small business, even though it may slightly dilute the Karlsfeld factory's margin potential. 

The initial stages of integration have been successful, but the work on cooperation between units and functions is likely to continue for quite some time

Incap announced yesterday an update on the integration of the Lacon acquisition. The process has progressed as planned, and operations are now centralized under the Incap brand. Naturally, the financial integration is also complete, as the former Lacon units have been reported as part of Incap since the acquisition. The next steps in the integration work involve realizing synergies between units and functions. In our view, this work is slower-moving and will continue for the next few years. In Incap's decentralized operating model, we understand that integration will not be that strict, and the factories will retain broad freedom and responsibility regarding operational activities. 

Demand has remained surprisingly strong for the Lacon units, which supports achieving the guidance and bodes well for the long term

In its press release, Incap commented that the former Lacon units had received an unexpectedly high number of new orders after the completion of the acquisition. Comments were particularly positive regarding the defense sector, of course. In our view, an upward trajectory in revenue development following the order intake would be important, as we believe the transaction's value creation relied primarily on profitably growing Lacon's units as part of Incap, as well as potential growth benefits Incap's other units might gain from former Lacon customers.  Positive revenue development would also be important for achieving this year's guidance, as Incap fell quite a bit behind its full-year guidance in Q1, especially regarding earnings. In at least Karlsfeld, we estimate Incap could increase its volume to some extent by adding shifts.