LapWall - Focus on the long game
LapWall releases its business review on 29th of April. We expect largely flat sales and profitability development for the first quarter. Alongside the guidance that will be published with the report, our focus lies on the company's order backlog which declined throughout 2024.
Some positive signals from the market
According to the latest market outlook from The Confederation of Finnish Construction Industries RT (CFCI), Finnish overall construction volumes declined by 8% in 2024, driven by residential construction where volumes fell 26% y/y. For 2025, CFCI expects that volumes turn to growth with 4% overall growth where residential volumes are expected to lead the turnaround with growth of 10% y/y. In addition to residential, non-residential volumes are expected to grow 3.5% and 4.0% during 2025-2026 respectively. Drivers for non-residential growth include for example defense and datacenter investments. We believe LapWall's roof element products have the potential to be well-suited for datacenter use. According to the Finnish Association for Manufacturers of Prefabricated Houses PTT, the prefabricated house sales, deliveries and backlog increased y/y during Q1/2025, while the total volumes remained at low levels. At the same time, outlook declined slightly from the strong levels seen late last year.
Expecting H2 trends to persist during Q1
LapWall did not provide guidance for 2025 in its Q4/24 report; instead, the guidance will be issued alongside the Q1/25 report. We have not made significant adjustments to our estimates for the year as we model net sales of EUR 45m (growth of 4.0% y/y) with EBITA of EUR 5.6m (EBITA margin of 12.4%). Demand for LapWall’s roof elements declined during H2 of last year after a strong first half. We expect this trend to continue throughout the first half as the roof element side of the business (incl. roof element systems) faces tougher comparable figures. Additionally, the company’s substantial EUR 6.5m order contributed to net sales during H1/24. LapWall has not yet succeeded in securing similar large orders during 2024-2025.
ACCUMULATE with a TP of EUR 4.3
LapWall is priced at 11-9x EV/EBITA and 13-10x adj. P/E on our estimates for 2025-2026. The pricing presents a discount of roughly 10-25% compared to peers. While we expect the market to remain challenging and multiples slightly elevated on absolute terms especially for 2025, we are inclined to focus on the company's long-term potential given its performance in difficult market conditions and robust balance sheet.