Etteplan - Acquisitions support sales
Etteplan reports Q1 results on 5th of May. We expect still slow organic sales development while acquisitions should continue to drive sales. The first quarter offered some encouraging signs in the market, though the intensified trade war has since cast a cloud over the outlook.
Turbulence in the market environment
As an engineering services company operating mostly in Europe, Etteplan is not directly affected by the escalating trade war. While there are no direct effects to Etteplan, some of its customers will be directly affected. Additionally, the uncertainty is likely to postpone investment decisions which is negative for the demand of Etteplan’s services. There were some encouraging signs in the first quarter, such as slight improvements in the Euro Area manufacturing PMI, capacity utilization, and business confidence compared to late 2024 levels, although they remained subdued overall. In addition, the Germany’s EUR 500b special fund for infrastructure investments is a positive medium to long-term driver also for Etteplan as roughly fifth of the company’s net sales came from Central European market in 2024. Increasing defense investment spending should also continue to drive growth in the company’s defense business.
Expecting organic sales decline for Q1
At the end of Q4, the company had 178 employees in Finland temporarily laid off (approximately 10% of the total workforce in Finland). With limited growth drivers for the first quarter, we expect organic sales to continue to decline y/y. We have made some estimate adjustment for the first quarter as we now model net sales of EUR 100m and EBITA of EUR 7.8m for Q1. Going forward, we still expect organic growth to pick up in H2 partly due to weaker comparable periods. Etteplan currently estimates 2025 net sales to EUR 365-400m and EBIT 23-30m. We now forecast net sales of EUR 385m and EBIT of EUR 25.4m for the FY 2025. We see the guidance low especially for net sales relatively conservative, yet the outlook is cloudy as the scale of indirect effects of the intensified trade war remains unknown.
ACCUMULATE (prev. BUY) with a TP of EUR 12.0
Etteplan is priced at adj. EV/EBITA of 11-10x and P/E of 13-11x on our estimates for 2025-2026E. This presents a discount of approximately 5-15% compared to peer group. Following the rise in the share price, valuation has become more neutral, yet the long-term potential remains significant. We update our recommendation to ACCUMULATE (prev. BUY).