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- Etteplan - Another difficult year behind
Etteplan - Another difficult year behind
Etteplan reports its Q4 figures on 12th of February. We expect that the operating environment has remained rather challenging in Q4. While 2024 proved to be another challenging year, we estimate that Etteplan will recover to a profitable growth path in 2025 partly aided by the acquisitions.
An acquisition, renewed strategy and financial targets
In December, Etteplan’s BoD approved the company’s renewed strategy and updated financial targets. The renewed strategy builds on the company’s previous strategy while adding utilization of artificial intelligence as one of the core drivers. With the strategy update, the company introduced a new target to have 35% share of net sales related to AI driven solutions by the end of 2027. Apart from this, the targets remained unchanged, with only the target year for growth and share of managed services revised to 2027 (prev. 2024). Etteplan announced acquisition of Novacon Powertrain in January. Novacon is a German product engineering services company that focuses on electrification in the automotive industry and the development of engine technology. It has customers in the automotive and rail transport industries and its customers include for example German premium car brands. Novacon employes roughly 180 employees and had net sales of approximately EUR 18m in 2023.
We maintain conservative organic growth estimate for 2025
We have now revised our estimates to include the purchase of Novacon. As the purchase price was not disclosed, we assume purchase price sales multiple of roughly 1x, in line with the sector valuation. We expect inorganic growth materializing from the acquisition to drive growth in Engineering Solutions. In addition, we model some inorganic growth for Software and Embedded for H1. On a group level, we estimate net sales growth of 8% to EUR 392m in 2025E. We retain organic growth estimates on the conservative side despite some early signs of improved market conditions for 2025. Economic growth in the Euro area is expected to improve slightly, though PMIs remain low. Profitability wise we expect a clear improvement from 2024 as especially H2 of last year was on the weaker side on Etteplan’s standards.
BUY with a TP of EUR 12.5 (prev. EUR 12.0)
After incorporating the Novacon acquisition and adjusting our estimates, we revise our TP to EUR 12.5 (prev. EUR 12.0) while keeping rating at BUY. The market proved to be weaker than we estimated in 2024, yet we expect that Etteplan will recover back to profitable growth path in 2025 partly aided by the acquisitions.