Consti - Order backlog provides support

Improved order backlog expected to aid growth
Consti reports its Q3 results on October 24th. During H1, Consti achieved a very limited net sales growth, with margins at fairly good levels. Performance has been affected by the Service Business, affecting both net sales and profitability. A highlight in Q2 was the order backlog, which reached its highest level in two years and amounted to EUR 277m. We expect the improved order backlog to slightly boost growth during H2 compared with H1. Ahead of Q3 we have slightly adjusted down our Q3 net sales expectations, otherwise our estimates remain intact. For Q3 we expect net sales of EUR 88.9m, for a y/y growth of 3.3%. We expect actions taken to improve profitability in the Service business to start to show to a smaller degree in Q3. Along with the expected slight growth, we expect relative profitability to improve during H2, compared with H2/24. Our EBIT estimate for Q3 is at EUR 3.5m, corresponding to a 3.9% EBIT-margin.

Near-term market outlook remains unfavourable
The near-term market outlook for renovation remains on the weaker side. Postponement of renovation projects or limiting the scale of projects is restricting volume development, with financing conditions a limiting factor among other. The Confederation of Finnish Construction Industries RT in its autumn economic review lowered its 2025 growth expectations for the renovation market to -0.5% from its previous estimate of 1.0%. Growth in 2026 is estimated to be only 0.5%. Consti has in our view been quite successful in navigating the challenging market, and we continue to expect above market growth. Margin upside potential remains limited given the already fairly good levels and competitive market landscape.

BUY with a target price of EUR 12.0
We reiterate our BUY-rating and target price of EUR 12.0. The current valuation puts EV/EBIT for 2025-2026E at 9-7x. Consti trades at a clear discount compared to peers, which in our view remains unjustified.