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Loihde - Ambitious plans for profitability

Loihde is under its updated strategy seeking to grow 10% annually and achieve an adj. EBITDA of 15% by 2027 for which Loihde, despite a confidence boosting CMD, still has quite a lot to show for.
Eventful week 
Loihde had an eventful week, posting a profit warning, deciding on an additional dividend, updating its strategy and hosting its CMD on November 16th. The profit warning was not very surprising given the high expectations set for Q4, with the main change being the lowered 2023 adj. EBITDA guidance to EUR 7-9m (prev. >EUR 10.3m), but still a disappointment given the reiterated guidance just two weeks prior. Loihde decided on the payment of an additional dividend of EUR 1.0 per share, with the record date being November 21st. 

Ambitious plans for profitability
Loihde’s updated strategy and CMD did not show any major deviations from the current business operations, but emphasis was put on further structural efficiency, service area and industry focus, as well as growth in continuous services. Loihde is also looking to utilize its strong balance sheet slightly more aggressively through the use of leverage for continuing acquisitions. The new financial targets are on the more ambitious side, at least given the recent performance, looking to grow around 10% annually, also including inorganic growth, and to reach an adj. EBITDA-margin of 15% by 2027. ROI is sought to be above 10% while retaining a quite modest net debt/EBITDA of 0-2x. The CMD for us was a slight confidence booster when looking at expectations for coming year profitability improvement, but Loihde still has quite a lot to prove when it comes to the long-term target. 

HOLD with a target price of EUR 12.3 (ex-div)
Despite the guidance downgrade and as such lowered 2023 estimates, the elements behind it were not game-changing and Loihde is still set for an overall decent year-end, and we keep our coming year estimates largely intact. We adjust our TP, excluding the additional dividend, to EUR 12.3 (prev. 13.0 pre-div).
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