LapWall - Challenging year ahead
LapWall's Q1 results fell short of our estimates, and the full-year guidance came in significantly below what we had anticipated. However, we expect activity to pick up toward the end of the year following the weaker H1, driven by the order backlog, which grew compared to year-end levels.
Results fell short, orders were on the positive side
LapWall’s Q1 proved softer than expected as net sales declined 9.8% to EUR 9.1m (Q1/24 EUR 10.1m, Evli est. EUR 10.0m). With lower volumes and gross margin, the company’s EBITA fell to EUR 0.6m (Q1/24 EUR 1.0m, Evli est. 1.0m) with a margin of 6.4% (Q1/24 10.1%). Based on our understanding, while volumes naturally contributed to the lower gross margin, the challenging competitive environment also had an impact. We see the increasing competition especially in the residential side slightly worrying as we have considered Lapwall's competitive position in the segment to be very strong. The positive factor amid softer figures was order backlog that grew q/q to EUR 14.5m (EUR 12.3m Q4/24). Backlog was at lower level compared to Q1/24 as the comparison period still included part of the larger EUR 6.5m order.
Soft guidance dampens expectations for 2025E
LapWall provided its guidance for 2025E in connection with the Q1 business review. The company estimates that net sales will be in the range of EUR 40-45m and EBITA in range of EUR 3-4m. We have revised our estimates accordingly and expect now net sales of EUR 42.4m (prev. EUR 45m) and EBITA of EUR 3.6m with a margin of 8.5% (prev. EBITA EUR 5.6m, EBITA margin 12.4%) for the year. We anticipate some improvement in Q2 compared to the weaker Q1, and we expect the company to gain momentum throughout H2. The ramp-up of Pyhäntä factory starts at the end of the year which presents some risk for one-time costs related to the ramp-up. We have also reduced our 2026E estimates, reflecting expectations of lower capacity utilization. However, both residential and non-residential construction volumes are still anticipated to recover.
ACCUMULATE with a TP of EUR 4.0 (prev. EUR 4.3)
LapWall is priced at 18-12x P/E and 16-11x EV/EBITA on our estimates for 2025-2026E. With the revised estimates, the pricing looks elevated for 2025E while still relatively neutral for 2026E. We continue to focus on the company's long-term potential, as the new more efficient capacity in Pyhäntä should drive profitable growth in the coming years as the market recovers especially on the residential side. We revise our TP to EUR 4.0 (prev. EUR 4.3) while maintaining rating at ACCUMULATE.