Etteplan - A good start for the year

Name: Evli
Price range: $

Etteplan’s Q1 saw all business areas achieving margins near the financial target of a 10% EBITA-margin. With a good order backlog development during the beginning of the year Etteplan also raised its guidance for 2019. We expect a 2019 revenue and EBITA of EUR 258.6m and 26.0m respectively. We retain our BUY rating with a target price of EUR 9.6 (9.0).

Good performance across the board and guidance upgrade

Etteplan’s Q1 results were good across the board, with especially profitability beating our estimates, driven by better than expected profitability in Engineering Solutions and Technical Documentation Solutions. Revenue also saw good growth of 11.3% in the quarter following a continued good demand situation despite market uncertainties. Etteplan upgraded its guidance, expecting the revenue and operating profit for 2019 to grow clearly (prev. only grow) compared to 2018.

Technical Documentation Solutions still faces challenges

Etteplan’s Q1 results showed little weakness, as although the on-going trade war did have some impact on the development in China, the significant new orders signed, the guidance upgrade and customer order backlog development alleviate some of the near-term uncertainty. The Technical Documentation Solutions business area remains the likely subpar performer due to elevated costs related to a larger project in Germany. Our revised revenue and EBIT estimates are 258.6m and 23.4m respectively, implying an increase of 9.4% and 12.4% from 2018 figures.

BUY with a target price of EUR 9.6 (9.0)

On our estimates Etteplan trades at a 26% and 12% discount on 2019E peer median EV/EBITDA and P/E. With our increased estimates and lesser near-term uncertainty we raise our target price to EUR 9.6 (9.0), valuing Etteplan at a P/E and EV/EBITDA of 13.5x and 7.6x respectively, and retain our BUY-rating.

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