Consti - Market presents some challenges
Our volume estimates were too high for Q4
Net sales in Q4 were EUR 86.1m (EUR 93.3m in Q4/22), below our estimates (EUR 96.1m). Sales declined 7.7% y/y. We expected growth to slow down from the high levels of Q3 while still growing as Q4 has typically been the strongest quarter revenue-wise. Our estimates proved to be way too optimistic as especially Corporations business area saw significantly higher decline in revenue than we estimated. This was partly explained by the project profile as some of the projects were front heavy and recurred more revenue in Q3 than during Q4. With the volume miss, EBIT amounted to EUR 3.9m (EUR 4.8m in Q4/22), below our estimates (EUR 4.8m) at a margin of 4.5% (Q4/22 5.2%).
Guidance range seems rather conservative
Consti estimates that its operating result for 2024 will be in the range of EUR 9–12 million. Our previous estimate for 2024 EBIT was EUR 13.3m as we expected net sales to grow 3.3% y/y to EUR 342m. We update our 2024 net sales estimate to EUR 317.5m, with a revenue decline of 1% y/y. With the lower net sales, our estimate for 2024 EBIT is at EUR 10.8m with a margin of 3.4%. The majority of Consti’s work for 2024 is secured by the strong backlog yet positive surprises in net sales during the year could result in positive adjustments to the guidance range. On the other hand, we see it quite unlikely that the lower end would be missed without particular problems in single projects or notably declined project sales within the financial year.
Valuation still attractive despite a minor bump in the road
Based on our estimates for 2024E Consti is priced at 8x EV/EBIT and 11x P/E, with a roughly 5-20% discount to Nordic construction and building technology peers. Even with the guidance range bottom of EUR 9m of EBIT, the EV/EBIT would set to roughly 9x which still presents a discount to the peers and would be roughly in line with the historic multiple levels. We retain our TP at EUR 13.0 with rating at BUY.