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Consti - On a slow but steady track forward

Consti reported Q1 results slightly below our estimates, with EBIT below our estimates driven by legal costs relating to the St. George arbitration proceedings. We continue to expect minor growth and margin improvement in 2021. We retain our HOLD-rating and target price of EUR 13.0.

Legal costs clearly affected profitability
Consti reported Q1 results that were slightly below our estimates. Revenue grew slightly to EUR 59.3m (EUR 60.2m/60.2m Evli/cons.) while EBIT fell y/y to EUR 0.1m (EUR 0.5m/0.6m Evli/cons.). EBIT was affected by legal costs relating to the St. George arbitration proceedings of EUR 0.4m (0.1m), without which relative profitability would have been close to previous year levels. The coronavirus pandemic also had an impact, with more worksite interruptions despite a lower number of cases. Consti had a positive start to the year in terms of order intake, with new orders of EUR 69.8m in the quarter, although the order backlog was still down slightly y/y.

Expect minor growth and margin improvement
Apart from adjustments due to the lower than expected Q1 figures, we make no changes to our estimates. The demand situation in general does not appear to have shown clear improvements yet and was at a reasonable level in Q1. Consti still sees that a higher share of the order backlog will be recognized during the on-going financial year compared to the same time last year and as such we continue to expect minor growth of 1.9%. We expect slight improvement in relative profitability and a 2021 EBIT of EUR 8.7m.

HOLD with a target price of EUR 13.0
The Q1 report did not in any material way affect our view of Consti in the near-term. Valuation in our view continues to appear fair given current limited growth prospects and valuation upside drivers. With our estimates largely intact we retain our HOLD-rating and target price of EUR 13.0.

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