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- Consti - Patience is a virtue
Consti - Patience is a virtue
Consti reports its Q4 result on 7th of February. We anticipate slight sales growth for Q4, although we expect ongoing margin pressure due to the sales mix. Our projections for 2025E remain conservative, as we anticipate only marginal support from the market.
Renovation volumes should turn to slight growth this year
The Confederation of Finnish Construction Industries RT (CFCI) expects volume growth of 1% for 2025 for renovation construction while it expects that the volumes decreased 4% in 2024. In June 2024, Euroconstruct expected only 0.4% decline in renovation volume while it expects 0.5% growth for 2025. The prevailing consensus regarding the Finnish renovation market suggests that it will commence a gradual recovery this year. We expect that demand from certain customer segments such as real estate investors will remain muted also going forward. Consti did not release any significant orders during the fourth quarter, and one of our main focuses in the report is the development of new orders.
Estimates for 2025E remain relatively modest
We have made only minor adjustments to our estimates ahead of the Q4 print. We continue to expect slight growth for Q4/24 while profitability trails that of Q4 last year due to sales mix. Overall, we expect net sales of EUR 324m and EBIT of EUR 10.3m for 2024E. Consti’s guidance for 2024 stands at EBIT of EUR 9-12m, therefore our estimate is slightly below the guidance middle. For 2025E, we expect net sales growth of 3% to EUR 333m and EBIT to land to EUR 11.8m with a margin of 3.5%. We expect Consti to provide relatively broad guidance, for which we anticipate a slight increase compared to the guidance for 2024. We have adjusted our dividend estimates. We now expect dividend of EUR 0.75 per share or approximately 80% of 2024E EPS (Consti’s long-term aim is to distribute at least 50% of the annual net profit as dividends). We estimate the dividend yield to be approximately 7% for 2024, and between 7-8% for the subsequent years.
BUY with at TP of EUR 12.5
We retain our TP of EUR 12.5 and maintain rating at BUY. Our target values Consti on 8x EV/EBIT and 12x P/E based on our estimates for 2025E. We continue to find the current pricing conservative, especially considering the potential cycle low volumes in the renovation construction market in 2024.