The Nomination Committee’s proposal for the Board of Directors of MilDef Group

The Nomination Committee proposes a seven-member Board of Directors for MilDef Group AB. It recommends re-election of Björn Karlsson (to continue as Chairman), Charlotte Darth, Carl Mellander, Lennart Pihl and Lisa Åbom, and the election of new directors Nicolas Hassbjer and Åsa Sundberg. Jan Andersson and Bengt-Arne Molin have declined re-election. This is a routine governance update and is unlikely to have a material impact on the company's valuation or share price.

Analysis

A governance refresh in a small-cap, defense-focused systems supplier often shifts the strategic emphasis toward scalable revenue streams (software, services, after‑sales) rather than bespoke hardware wins. If the company executes that pivot, expect gross margins to improve by ~200–400bps over 12–36 months as recurring revenue replaces low-margin build-to-order contracts and as unit economics benefit from higher software attach rates.

There is a measurable short-term execution risk from loss of institutional knowledge: contract delivery schedules, export-control certifications and customer integrations can slip for 3–9 months, pressuring working capital and quarterly EBITDA. Supplier and manufacturing cadence matters here — a single missed subsystem delivery from a Tier‑1 partner could delay revenue recognition by a quarter and force one-off cost overruns equal to low‑single-digit percent of quarterly sales.

Catalysts to watch are order‑book updates, procurement wins with NATO/European customers, any senior commercial hires, and disclosure of new reseller/channel agreements — these are 1–12 month binary events that will either validate a scale play or expose execution gaps. On the capital side, board-level appetite for M&A or bolt‑on acquisitions (to accelerate software/IP capabilities) materially increases upside optionality but also raises near‑term cash/credit needs.

From a competitive-dynamics angle, a successful move toward industrial networking and recurring revenue will shift procurement toward larger EMS and system integrators, disadvantaging small local CEMs but opening cross‑sell potential with industrial automation vendors. This creates a 12–24 month window where valuation multiple expansion is plausible if growth becomes demonstrably less lumpy and more annuity-like.

Key Decisions for Investors

• Small, tactical long (1–2% NAV) in the company (accumulate on any >8% pullback) with a protective 3–6 month put hedge sized to 30–50% of the position; thesis: 12‑month upside 30–60% if recurring revenue ramps, downside ~30% if contract slippage occurs.
• Pair trade to isolate re‑rating: long the small-cap defense supplier (as above) / short Saab AB (SAAB-B.ST) 0.5x notional — timeframe 6–12 months; this isolates company‑specific execution from sector cyclicality and targets alpha if governance-driven strategy shift is successful.
• Event-driven options: buy 9–15 month OTM calls (25–35% OTM) ahead of the next order‑book or procurement disclosure; limit allocation to 0.5% NAV — asymmetric payoff if a material channel/M&A announcement occurs.
• Risk management rule: if delivery KPIs or order intake miss two consecutive quarters, cut equity exposure to zero and hold a small short against domestic system integrators; conversely, if recurring revenue >20% of sales is achieved in a quarter, increase exposure by 50% to capture multiple expansion.