Consti - Performance reflects weaker market
Although Consti posted good growth figures in Q3 considering market conditions, margins were lower than anticipated. With slight downward revisions to our short-term expectations, we adjust our TP to EUR 11.5 (12.0) but retain our BUY-rating.
Good growth but margins lower than anticipated
Consti’s Q3 results were two-folded. Net sales growth was slightly better than expected, with net sales at EUR 90.8m (Evli 88.9m), up 5.6% y/y. The operating profit was below our estimates, at EUR 3.1m (3.5m). Margins continued to remain below comparison period figures due to weaker performance in the Service business, weaker market conditions and allocation of resources to tendering and negotiation activities. Order intake was on the lower side, at EUR 41.2m, and the order backlog declined 4.2% y/y to EUR 240m. Consti reiterated its operating profit guidance range of EUR 9-12m.
Market weakness driven slight downward revisions
We have lowered our 2025 EBIT-estimate to EUR 9.2m (prev. 9.9m) due to deviations in Q3 and slightly lowered net sales and resulting lower profitability expectations for Q4. The slightly weaker than anticipated Q3 mandates margin improvement in Q4 for the guidance range to be reached and offers limited room for error. We have further slightly lowered both growth and profitability expectations for 2026e, with the market situation remaining challenging. Although the near-term growth outlook for the renovation market appears to be in the very low single-digit figures at best, some leeway may be brought by recovery in new building construction and potential easing of the competitive landscape in renovation. Without any easing of the competitive situation and demand growth, margin potential appears to be capped, although improvements in the Service-business should still provide some upside in the near-term.
BUY with a target price of EUR 11.5 (12.0)
With the slight downward revisions to our estimates, we adjust our target price to EUR 11.5 (prev. 12.0) and retain our BUY-rating. We continue to consider valuation quite attractive and with Consti’s recent year track on project management capabilities and ability to secure orders despite tightened tendering criteria view the margin downside risk to be fairly low.