LapWall - Strong finish to the year
LapWall’s Q4 was slightly stronger than we expected in terms of profitability. Although the declining backlog poses a potential downside risk, the company's tender pipeline has shown quarter-over-quarter improvement throughout 2024. Additionally, management noted that project sales have developed positively in early 2025.
Profitability exceeded our expectations
LapWall’s net sales fell 13.3% y/y during Q4 to EUR 10.5m while we estimated net sales of EUR 11.1m. The main negative driver behind volume development was the company’s roof elements business where demand fell after a strong H1. On the other hand, the company was able to increase production in the wall elements business. Profitability was at very strong level considering the net sales development as EBITA was at EUR 1.3m (EUR 1.0m Q4/23, EUR 1.2m Evli est.) at a margin of 12.3% (Q4/23 8.4%). We expect that the improved volumes in the Pyhäntä factory coupled with successful fixed costs management were the main drivers behind the development. The company’s BoD proposes a dividend of EUR 0.18 per share, topping our previous estimate of EUR 0.11 clearly with payout rate of approx. 75% of 2024 EPS. The payout rate is in line with the company’s updated long-term financial targets where it targets payout ratio of 50-75% (prev. 30-50%).
Short-term outlook remains uncertain
LapWall’s order backlog declined 28% to EUR 12.3m. While the backlog declined notably, it is important to notice that the backlog of last year included the large Metsä Wood Äänekoski order of EUR 6.5m. Excluding the large order, we expect that backlog was relatively flat y/y. While the backlog trend seems worrying, the company’s tender pipeline kept growing q/q & y/y and was at EUR 65.5m at the end of 2024 (EUR 45.5m 12/23). We have revised our estimates slightly downwards in terms of sales growth for 2025E. We now estimate net sales of EUR 45.0m for 2025E (prev. EUR 47.6m) and EBITA of EUR 5.6m (prev. EUR 5.8m). We estimate that the company is able to maintain the fixed costs discipline while we expect the ongoing shift in sales mix to continue.
Focus on the future
We consider the company’s current pricing based on 2024 actual figures and our projections for 2025E to be relatively neutral. The market is expected to remain challenging; however, we are inclined to focus on the company's long-term potential given its performance in difficult market conditions and robust balance sheet. We revise our TP to EUR 4.3 (prev. EUR 4.2) while we maintain rating at ACCUMULATE.