Etteplan - Expect good Q4 despite minor bumps

Name: Evli
Price range: $

Etteplan will report Q4 results on February 11th. We expect Etteplan to finish the year on a positive note, although the industrial strike in December is expected to have had a minor negative impact. We expect revenue to grow 14.7% in Q4 and an EBITA-margin of 9.9%, near the comparison period figure. Guidance should reflect growth in revenue and operating profit. We expect a dividend proposal of EUR 0.36 per share. Following peer multiple appreciation, we raise our TP to EUR 10.6 (9.6) and retain our HOLD-rating.

Industrial strike expected to have a minor impact on figures

We expect Q4 revenue of EUR 72.1m, with growth of 14.7% y/y, driven by acquisitions made during mid-2019. We expect an EBITA of EUR 7.1m, at a margin of 9.9%. Some uncertainty in Q4 figures is brought by the industrial strike in Finland in December, which we expect to have had a minor negative impact on Q4 figures. Etteplan made two smaller acquisitions during the quarter within technical documentation, with some 50 employees combined, which will have a minor impact on growth in 2020. We expect a dividend proposal of EUR 0.36 per share.

Continued revenue and earnings growth expected in 2020

The outlook for 2020 remains somewhat hazy following demand uncertainties and a slightly slower organic growth during 2019. We expect Etteplans guidance for 2020 to at least reflect clear growth in revenue and EBIT compared to 2019, supported by the acquisitions made during 2019. A guidance reflecting significant growth this early in 2020 would be a positive sign. We expect a sales growth of around 10% and growth in EBIT of 8% in 2020.

HOLD with a target price of EUR 10.6 (9.6)

Valuation multiples for both peers and Etteplan have increased post-Q3 and current valuation does not appear particularly attractive, although Etteplan still remains on good track. We raise our target price with the increased peer multiples and value Etteplan at 15x 2019E P/E, for a target price of EUR 10.6 (9.6) and retain our HOLD-rating.

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