Vaisala - Performance on track
The underlying demand for Vaisala’s applications continued strong. With the robust start of 2022, we upgraded our estimates. We retain our HOLD rating and adjust TP to EUR 45.0 (41.0).
Revenue growth scaled nicely
With the strong Q4’21 order book, Vaisala’s Q1 topline topped our expectations by growing by 29% y/y to EUR 118.8m (Evli: 108.6m). The growth was driven by IM’s industrial instruments and life science as well as W&E’s renewable energy and meteorology. While aviation saw the demand and orders growing, its Q1 sales yet declined y/y. With improved gross margin, revenue growth scaled nicely and EBIT over doubled from the comparison period. Group EBIT amounted to EUR 17.5m (14.8% margin).
W&E’s aviation took a big step in orders received
Vaisala’s future seems bright as the order book broke another record at EUR 168.5m. Aviation took a big step in recovery towards the pre-pandemic level in terms of orders received. We expect aviation to be one of the revenue growth drivers of W&E during the next quarters. Strong order development continued also in renewable energy, industrial instruments, and life science. Vaisala, once again, managed to deliver all its orders and IM succeed in capturing market share with its delivery reliability. In Q1, freshly acquired SaaS company AerisWeather contributed Vaisala’s topline by EUR 0.6m and EBIT by some EUR 0.1m. The acquisition supports execution of W&E’s strategy to drive growth in DaaS and SaaS recurring revenue businesses.
Low visibility of component availability continues
The component shortage had an impact on Vaisala’s Q1 gross margin of which impact was eventually offset by revenue scalability. Gross margin impact was smaller than in previous quarters, less than 1%-p. However, in Q1, the company made a commitment on spot component purchases, most of which will be realized later. In our understanding, the gross margin impact might be more visible during the next quarters. In addition, COVID-19 lockdowns in China might cause some extra constraints in Vaisala’s supply chains, resulting in postponed product deliveries or forcing the company to place additional spot-component purchases.
HOLD with a target price of EUR 45.0 (41.0)
Vaisala held its guidance intact, and with the same performance continuing, we find the guidance quite cautious. However, the market possesses an increasing amount of uncertainty. We have revised our near-term estimates upwards based on the strong Q1 result and record-level order book. Now, we expect 22E revenue to land near the upper bound of the guidance, at EUR 490.4m (+12% y/y). Revenue growth is driven by both business units: we expect IM to grow by 17.7% y/y and W&E to grow by 7.9% y/y in 2022. Our 22E EBIT estimate amounts to EUR 64.5m (13.1% margin). While the Q1 growth pace was rapid, in Q2 we expect the slope of revenue growth to smoothen. On a group level, we expect the topline to grow by 7.9% y/y to EUR 118.1m. In our understanding, Q1 included some seasonality, and hence we expect Q2 revenue to be approx. flat q/q, while in previous years, Q1 has been the calmest quarter, especially in W&E. We expect the gross margin to be a bit softer than in the previous year, but scalability to improve the Q2 profitability y/y to EBIT of EUR 12.5m (10.6% margin). With our upgraded estimates, Vaisala (22E EV/EBITDA ~18x) is still trading with a premium to its peers (22E EV/EBITDA ~16x). We find the premium justified but still remind that valuation stretches. We retain our HOLD rating and raise our TP to EUR 45.0 (41.0).
With the strong Q4’21 order book, Vaisala’s Q1 topline topped our expectations by growing by 29% y/y to EUR 118.8m (Evli: 108.6m). The growth was driven by IM’s industrial instruments and life science as well as W&E’s renewable energy and meteorology. While aviation saw the demand and orders growing, its Q1 sales yet declined y/y. With improved gross margin, revenue growth scaled nicely and EBIT over doubled from the comparison period. Group EBIT amounted to EUR 17.5m (14.8% margin).
W&E’s aviation took a big step in orders received
Vaisala’s future seems bright as the order book broke another record at EUR 168.5m. Aviation took a big step in recovery towards the pre-pandemic level in terms of orders received. We expect aviation to be one of the revenue growth drivers of W&E during the next quarters. Strong order development continued also in renewable energy, industrial instruments, and life science. Vaisala, once again, managed to deliver all its orders and IM succeed in capturing market share with its delivery reliability. In Q1, freshly acquired SaaS company AerisWeather contributed Vaisala’s topline by EUR 0.6m and EBIT by some EUR 0.1m. The acquisition supports execution of W&E’s strategy to drive growth in DaaS and SaaS recurring revenue businesses.
Low visibility of component availability continues
The component shortage had an impact on Vaisala’s Q1 gross margin of which impact was eventually offset by revenue scalability. Gross margin impact was smaller than in previous quarters, less than 1%-p. However, in Q1, the company made a commitment on spot component purchases, most of which will be realized later. In our understanding, the gross margin impact might be more visible during the next quarters. In addition, COVID-19 lockdowns in China might cause some extra constraints in Vaisala’s supply chains, resulting in postponed product deliveries or forcing the company to place additional spot-component purchases.
HOLD with a target price of EUR 45.0 (41.0)
Vaisala held its guidance intact, and with the same performance continuing, we find the guidance quite cautious. However, the market possesses an increasing amount of uncertainty. We have revised our near-term estimates upwards based on the strong Q1 result and record-level order book. Now, we expect 22E revenue to land near the upper bound of the guidance, at EUR 490.4m (+12% y/y). Revenue growth is driven by both business units: we expect IM to grow by 17.7% y/y and W&E to grow by 7.9% y/y in 2022. Our 22E EBIT estimate amounts to EUR 64.5m (13.1% margin). While the Q1 growth pace was rapid, in Q2 we expect the slope of revenue growth to smoothen. On a group level, we expect the topline to grow by 7.9% y/y to EUR 118.1m. In our understanding, Q1 included some seasonality, and hence we expect Q2 revenue to be approx. flat q/q, while in previous years, Q1 has been the calmest quarter, especially in W&E. We expect the gross margin to be a bit softer than in the previous year, but scalability to improve the Q2 profitability y/y to EBIT of EUR 12.5m (10.6% margin). With our upgraded estimates, Vaisala (22E EV/EBITDA ~18x) is still trading with a premium to its peers (22E EV/EBITDA ~16x). We find the premium justified but still remind that valuation stretches. We retain our HOLD rating and raise our TP to EUR 45.0 (41.0).