Consti - It's a waiting game
Consti reports its Q1 figures on 25th of April. We expect flat sales in the seasonally quiet quarter, with slightly improved profitability compared to a softer Q1/24. Market should start to improve slowly this year, after two years of stronger volume decline for renovation construction.
Renovation volumes should finally start to grow slowly in 2025
According to estimates by Confederation of Finnish Construction Industries RT, Finnish renovation volumes continued to decline in 2024 by 4%. Going forward, CFCI expects slow recovery in volumes as it expects growth of 1% for both 2025 and 2026. One of the reasons for slower rebound remains the weaker access to financing for renovation projects. Although residential new construction volumes are expected to begin increasing in 2025, the volumes will remain low, which will likely keep the competitive environment tight in the renovation sector. The survey study conducted by Finnish Association of HVAC Technical Contractors continues to point towards improving market sentiment as the survey balance figure has continued to improve starting from Autumn 2023. The impact of the recent escalation in the trade war remains difficult to measure, but it is likely to lead to slower economic growth, which could have a negative effect on the Finnish construction sector. Meanwhile, the Euro-Zone inflation keeps slowing down which points to continuation of rate cuts.
Estimates remain unchanged
Consti expects 2025 EBIT to be in the range of EUR 9-12m. We have not made material adjustments to our estimates as we continue to forecast EBIT of EUR 10.8m for the year. The company’s order backlog stood at EUR 240m at the end of the year, declining 11% year-on-year. Our current estimate for sales growth for 2025 of roughly 3% requires slight order intake pick-up during the H1. The order backlog of Housing Companies business area was roughly EUR 29m higher y/y at the end of 2024. We expect this to support the company’s margins as the Housing Companies segment has historically achieved higher profitability compared to the other segments.
BUY with a TP of EUR 12.5
With the share price and estimates unchanged from our latest update, we retain our TP at EUR 12.5 and rating at BUY. Consti is priced at EV/EBIT of 7-6x and P/E of 10-9x based on our estimates for 2025-2026E. The company is currently priced at a significant discount to both its peers and its own historic multiple levels. In addition, the company’s stock provides dividend yield of over 7% for the coming years.