Etteplan - Investing into future growth
Etteplan’s Q3 fell slightly short of our estimates. Investments into growth should bear fruition in 2022 but near-term cost and demand uncertainty is seen.
Added softness to seasonally slower quarter
Etteplan reported its Q3 results, which overall were slightly softer than our already somewhat cautious estimates. Revenue grew 21% on the weaker comparison period to EUR 66.9m (EUR 69.3m/71.0m Evli/cons.), of which organic growth some 14%. The operating profit amounted to EUR 4.6m (EUR 5.2m/5.6m Evli/cons.). Compared to our estimates the softness was seen in Engineering Solutions, while Technical Documentation Solutions and Software and Embedded Solutions were quite in line with our estimates. The softness was affected by the vacation season and thereto related slower start of projects and the prevailing global component shortage also start to show. Etteplan also invested into growth, with the company’s headcount clearly on the rise.
Some uncertainty but ingredients for good growth
We have made only minor adjustments to our estimates, mainly from the lower than expected Q3 results. Our 2021 revenue and EBIT estimates remain within the lower half of the guidance range (revenue EUR 295-310m and EBIT 25-28m) at EUR 297.7m and 25.9m respectively. We remain somewhat cautious in Q4 our estimates due to some demand uncertainty and expected cost increases in returning to the new normal after the hiatus caused by the pandemic. Industry views on the component shortage issues varies but we expect to see challenges continue into H1/2022. We currently expect Etteplan to grow 8.2% in 2022. Should the component shortage not have a more material impact and acquisitions continue, growth should be poised to remain double-digit.
HOLD with a target price of EUR 17.0 (17.5)
With the slight increase in uncertainty we adjust our target price to EUR 17.0 (17.5), valuing Etteplan at a slight premium to peers. Etteplan is clearly investing more into future growth, which bodes well for 2022 should the market conditions not deter.
Etteplan reported its Q3 results, which overall were slightly softer than our already somewhat cautious estimates. Revenue grew 21% on the weaker comparison period to EUR 66.9m (EUR 69.3m/71.0m Evli/cons.), of which organic growth some 14%. The operating profit amounted to EUR 4.6m (EUR 5.2m/5.6m Evli/cons.). Compared to our estimates the softness was seen in Engineering Solutions, while Technical Documentation Solutions and Software and Embedded Solutions were quite in line with our estimates. The softness was affected by the vacation season and thereto related slower start of projects and the prevailing global component shortage also start to show. Etteplan also invested into growth, with the company’s headcount clearly on the rise.
Some uncertainty but ingredients for good growth
We have made only minor adjustments to our estimates, mainly from the lower than expected Q3 results. Our 2021 revenue and EBIT estimates remain within the lower half of the guidance range (revenue EUR 295-310m and EBIT 25-28m) at EUR 297.7m and 25.9m respectively. We remain somewhat cautious in Q4 our estimates due to some demand uncertainty and expected cost increases in returning to the new normal after the hiatus caused by the pandemic. Industry views on the component shortage issues varies but we expect to see challenges continue into H1/2022. We currently expect Etteplan to grow 8.2% in 2022. Should the component shortage not have a more material impact and acquisitions continue, growth should be poised to remain double-digit.
HOLD with a target price of EUR 17.0 (17.5)
With the slight increase in uncertainty we adjust our target price to EUR 17.0 (17.5), valuing Etteplan at a slight premium to peers. Etteplan is clearly investing more into future growth, which bodes well for 2022 should the market conditions not deter.