Consti - Healthy order flow supports sales
Profitability fell short of our estimates in the seasonally quiet Q1. While the start was not as strong as we forecasted, healthy order intake supports net sales going forward.
Net sales in line while profitability fell short
Net sales in Q1 were EUR 65.6m (EUR 65.5m in Q1/24), in line with our estimate (Evli est. EUR 65.7m). The Housing Companies segment's substantial order backlog at the end of 2024 boosted Q1 growth more than anticipated, in contrast to declining sales in the Corporations segment. Operating profit in Q1 amounted to EUR -0.1m (EUR 0.2m in Q1/24), below our estimate of EUR 0.4m. Profitability was negatively affected by lower-than-expected net sales and profitability in Service business. We expect that majority of the negative delta in profitability y/y was related to the poor performance of the company’s service business. Profitability in the project business was broadly in line with the company’s expectations while competitive environment remained tight decreasing the margin potential. The main positive from the Q1 report was order intake which grew 65.5% y/y and backlog was at EUR 246.4m at the end of the quarter, up 0.8% y/y and 2.6% q/q. Order intake was positively driven by orders in the Housing Companies and Corporations business areas.
We expect EBIT to stay relatively level y/y in 2025
Consti kept its guidance unchanged and expect EBIT to be in the range of EUR 9-12m. A larger share of backlog at the end of Q1/25 will be recognized in net sales within the fiscal year compared to Q1/24. We expect that the healthy backlog, in addition to positive trend in Housing Companies business area will continue to support revenue development as we expect sales growth of 2.4% for the full year to EUR 334.6m (prev. EUR 335.9m). We now estimate EBIT to be EUR 10.4m (previously EUR 10.8m), as we anticipate the competitive landscape to remain challenging throughout the fiscal year. However, we expect the headwinds affecting the service business to ease compared to the extent observed in Q1.
BUY with a TP of EUR 12.5
We retain our TP at EUR 12.5 and rating at BUY. Consti is priced at avg. EV/EBIT of 7x and P/E of 9x for 2025-2026E based on our updated estimates. Our TP implies EV/EBIT of 9x and P/E of 12x, which we view as more neutral for the company, particularly considering the subdued earnings levels caused by the challenging market conditions.