Etteplan - Good quarter excluding NRI’s
Etteplan’s continued good performance in Q1 was overshadowed by significant non-recurring items. The outlook still remains quite decent in the uncertain market.
Profitability burdened by non-recurring items
Etteplan’s Q1 results, operatively speaking, were slightly better than we expected. Net sales amounted to EUR 95.0m (EUR 92.0m/91.7m Evli/Cons.), with growth of 8% (6.9% organic) at comparable FX. EBIT came in at EUR 6.3m (EUR 7.4m/7.0m Evli/cons.). EBIT included exceptional items amounting to EUR -2.0m. We had anticipated some softness due to the anticipated one-off salary payments in accordance with the collective labour agreement in Finland, but Etteplan also booked EUR 0.9m in NRI’s mainly due to organizational restructuring costs concerning Technical Communication Solutions. In terms of service areas, the operational efficiency of Engineering Solutions was again at a good level, while Software and Embedded Solutions and Technical Communication Solutions remained sub-par.
Room for margin improvement
Our estimates on an annual basis remain quite unchanged excl. the Q1 NRI’s, with our EBIT estimate now at EUR 29.9m (prev. 31.5m, co’s guidance 28-33m). Potential for improvement towards the upper half of the guidance remains from the still somewhat underperforming services areas, with Etteplan seeing potential for the latter half of the year after actions taken, but we still remain cautious. We see no clear changes to the market outlook, with the overall demand situation remaining modest. Customer demand potential appears firm, but investment willingness is still bogged down by macroeconomic uncertainties. We continue to see potential for Etteplan to move above the 10% EBITA-margin mark on group level in 2024, providing earnings upside amidst the slower growth environment.
HOLD with a target price of EUR 16.0
Without any notable changes to our estimates, views, or valuation multiples, we retain our HOLD-rating and target price of EUR 16.0, valuing Etteplan at a slight premium to peers.
Etteplan’s Q1 results, operatively speaking, were slightly better than we expected. Net sales amounted to EUR 95.0m (EUR 92.0m/91.7m Evli/Cons.), with growth of 8% (6.9% organic) at comparable FX. EBIT came in at EUR 6.3m (EUR 7.4m/7.0m Evli/cons.). EBIT included exceptional items amounting to EUR -2.0m. We had anticipated some softness due to the anticipated one-off salary payments in accordance with the collective labour agreement in Finland, but Etteplan also booked EUR 0.9m in NRI’s mainly due to organizational restructuring costs concerning Technical Communication Solutions. In terms of service areas, the operational efficiency of Engineering Solutions was again at a good level, while Software and Embedded Solutions and Technical Communication Solutions remained sub-par.
Room for margin improvement
Our estimates on an annual basis remain quite unchanged excl. the Q1 NRI’s, with our EBIT estimate now at EUR 29.9m (prev. 31.5m, co’s guidance 28-33m). Potential for improvement towards the upper half of the guidance remains from the still somewhat underperforming services areas, with Etteplan seeing potential for the latter half of the year after actions taken, but we still remain cautious. We see no clear changes to the market outlook, with the overall demand situation remaining modest. Customer demand potential appears firm, but investment willingness is still bogged down by macroeconomic uncertainties. We continue to see potential for Etteplan to move above the 10% EBITA-margin mark on group level in 2024, providing earnings upside amidst the slower growth environment.
HOLD with a target price of EUR 16.0
Without any notable changes to our estimates, views, or valuation multiples, we retain our HOLD-rating and target price of EUR 16.0, valuing Etteplan at a slight premium to peers.