Etteplan - Executing growth strategy

Etteplan will report Q2 results on August 13th. Etteplan has during and after the quarter made acquisitions with a combined number of employees of over 250, expected to have an insignificant impact on Q2 but to aid in achieving the FY2019 guidance amid continued global uncertainty. We expect minor overall margin improvement y/y in Q2 while still remaining cautious to margin development in Technical Documentation Solutions. Following the post-Q1 share price rally we downgrade our rating to HOLD (BUY) with a target price of EUR 9.6.

Executing its M&A aided growth strategy

Our estimates ahead of Q2 remain intact apart from adjustments made for the acquisitions of Devex Mekatronik (Sweden) and EMP Engineering Alliance (Germany). The two companies combined had revenue of around EUR 26m and over 250 employees in 2018. To our understanding the revenue generated will mainly fall under Engineering Solutions and a smaller share under Software and Embedded Solutions. Our 2019 and 2020 net sales estimates are up by some 3% and 8% respectively. For Q2 we expect net sales and EBITA of EUR 66.6m (Q2/18: 62.0m) and EUR 6.9m (Q2/18: 6.2m).

Market outlook comments of interest

Etteplan expects its revenue and operating profit for 2019 to grow clearly compared to 2018. The acquisitions made will certainly aid in achieving the guidance and reduces 2020 sales growth concerns, but recent macro development still warrants cautionary remarks and our focus in the Q2 report will be on market outlook comments.

HOLD (BUY) with a target price of EUR 9.6

Etteplan’s share price has climbed after the Q1 guidance upgrade and although still at a slight discount to peers, valuation is looking fairer when also considering Etteplan’s historical valuation. We downgrade our rating to HOLD (BUY) and retain our target price of EUR 9.6.

Open Report