Etteplan - Set to benefit from soft comparisons
Etteplan reports Q3 figures on October 29. We expect improvement from an easier comparison period, although organic growth drivers remain few and visibility strained.
Room to improve in H2
Etteplan's first-half performance was soft, as both revenue and profitability declined y/y, reflecting subdued customer investment activity and increased uncertainty stemming from the trade war. In Q2, conditions weakened further, weighing on all service areas, with customers not only postponing but in some cases cancelling projects. For Q3, we focus on how these macro headwinds have evolved and whether improved order intake from key customers has started to translate into new projects. The Eurozone Manufacturing PMI showed some improvement through H1 and into Q3, which could support a gradual recovery in industrial activity. Nevertheless, visibility remains limited, and overall activity is difficult to gauge. However, July’s lowered guidance still implies recovery in H2 for both revenue and EBIT.
Our estimates at the lower end of guidance
Etteplan expects FY25 revenue to be EUR 365-385m and EBIT to be EUR 19-24m. To reach the guidance, H2 will need to show a clear improvement in both revenue and profitability, with Q3 in particular set to benefit from a relatively easy comparison period. Recent acquisitions and cost adaptation measures implemented in Q2 should support growth and profitability, while organic momentum remains limited amid weak market conditions and a declining organic headcount. Profitability is expected to recover from last year’s low levels, which were burdened by NRIs and led to a reported EBIT margin of just 1.8%. According to management, NRIs are expected to drop to a lower level in H2. We maintain our estimates ahead of the Q3 report, forecasting 2025E net sales of EUR 368m and EBIT of EUR 19.5m, both toward the lower end of the guidance range. For Q3, we forecast net sales of EUR 83m and EBIT of EUR 3.9m.
ACCUMULATE with a TP of EUR 11.0
Etteplan is valued at an adjusted EV/EBITA of 12–10x based on our estimates for 2025–26E. We view the current valuation as neutral both on a relative and absolute basis in the short term, while we continue to see significant long-term potential. We maintain our target price of EUR 11.0 and ACCUMULATE rating.