Etteplan |

A growth focused engineering services company

| Finland

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Financial overview

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Etteplan - Some uncertainty heading into 2020

12.02.2020 | Company update

Etteplan’s Q4 results were below expectations, driven by the impact of the industrial strike in Finland. The guidance for 2020 EBIT was softer than expected, with some caution being taken due to the unpredictability in the impact of the coronavirus. Demand outlook comments were nonetheless slightly positive based on early 2020 development. We have slightly lowered our 2020 estimates to account for a likely weaker Q1. We retain our HOLD-rating with an ex-div TP of EUR 10.2.

Clear negative impact of industrial strike

Etteplan’s Q4 results were below expectations. Revenue amounted to EUR 71.8m (EUR 72.1m/72.7m Evli/cons.), with 14.2% growth y/y (1.4% organic excl. FX), driven by the mid-2019 acquisitions. EBIT amounted to EUR 5.6m (EUR 6.1m/6.3m Evli/cons.) and EBIT excl. NRI’s to EUR 5.1m. Profitability was below comparison period figures in all service areas, driven mainly by the impact of the industrial strike in Finland in December. Challenges in certain projects also affected profitability of the Software and Embedded Solutions service area. The BoD’s dividend proposal is EUR 0.35 per share (EUR 0.36 Evli/cons.)

Coronavirus prompts EBIT guidance cautiousness

Etteplan expects revenue to grow clearly in 2020 and EBIT to be at the same level or improve compared to 2019. The EBIT guidance was softer than expected, reflective of a more cautious approach due to uncertainty related to the coronavirus. Comments on general demand outlook were slightly more positive, with signs of pick-up following slightly decreased political uncertainty. We have lowered our 2020 EBIT estimate by some 7%, expecting a weaker Q1 due to the coronavirus.

HOLD with an ex-div target price of EUR 10.2

On our revised estimates and slightly increased caution due to the coronavirus uncertainty we adjust our target price to EUR 10.2 ex-div and retain our HOLD-rating, valuing Etteplan at 14x 2020 P/E.

Etteplan - Some softness in results/guidance

11.02.2020 | Earnings Flash

Etteplan's net sales in Q4 amounted to EUR 71.8m, in line with our estimates and consensus (EUR 72.1m/72.7m Evli/cons.). EBIT amounted to EUR 5.6m, below our estimates and below consensus (EUR 6.1m/6.3m Evli/cons.). Dividend proposal: Etteplan proposes a dividend of EUR 0.35 per share (EUR 0.36 Evli/Cons.).

  • Net sales in Q4 were EUR 71.8m (EUR 62.8m in Q4/18), in line with our and consensus estimates (EUR 72.1m/72.7m Evli/Cons.). Growth in Q4 amounted to 14.2 % y/y, of which 0.7 % organic growth.
  • EBIT in Q4 amounted to EUR 5.6m (EUR 5.7m in Q4/18), below our and consensus estimates (EUR 6.1m/6.3m Evli/cons.), at a margin of 7.7 %. EBIT (excl. NRIs) amounted to EUR 5.1m (Evli EUR 6.1m).
  • EPS in Q4 amounted to EUR 0.16 (EUR 0.18 in Q4/18), below our and consensus estimates (EUR 0.19/0.20 Evli/cons.).
  • Engineering Solutions: Net sales in Q4 were EUR 40.8m vs. EUR 40.5m Evli. EBITA in Q4 amounted to EUR 3.6m vs. EUR 4.0m Evli.
  • Software and Embedded Solutions: Net sales in Q4 were EUR 17.7m vs. EUR 19.1m Evli. EBITA in Q4 amounted to EUR 1.4m vs. EUR 2.1m Evli.
  • Technical Documentation Solutions: Net sales in Q4 were EUR 13.1m vs. EUR 12.5m Evli. EBITA in Q4 amounted to EUR 0.9m vs. EUR 1.0m Evli.
  • Dividend proposal: Etteplan proposes a dividend of EUR 0.35 per share (EUR 0.36 Evli/Cons.).
  • Guidance: revenue for 2020 expected to increase clearly and EBIT to be at the same level or improve compared to 2019. The EBIT guidance appears somewhat soft compared to our expectations.

Etteplan - Expect good Q4 despite minor bumps

06.02.2020 | Preview

Etteplan will report Q4 results on February 11th. We expect Etteplan to finish the year on a positive note, although the industrial strike in December is expected to have had a minor negative impact. We expect revenue to grow 14.7% in Q4 and an EBITA-margin of 9.9%, near the comparison period figure. Guidance should reflect growth in revenue and operating profit. We expect a dividend proposal of EUR 0.36 per share. Following peer multiple appreciation, we raise our TP to EUR 10.6 (9.6) and retain our HOLD-rating.

Industrial strike expected to have a minor impact on figures

We expect Q4 revenue of EUR 72.1m, with growth of 14.7% y/y, driven by acquisitions made during mid-2019. We expect an EBITA of EUR 7.1m, at a margin of 9.9%. Some uncertainty in Q4 figures is brought by the industrial strike in Finland in December, which we expect to have had a minor negative impact on Q4 figures. Etteplan made two smaller acquisitions during the quarter within technical documentation, with some 50 employees combined, which will have a minor impact on growth in 2020. We expect a dividend proposal of EUR 0.36 per share.

Continued revenue and earnings growth expected in 2020

The outlook for 2020 remains somewhat hazy following demand uncertainties and a slightly slower organic growth during 2019. We expect Etteplans guidance for 2020 to at least reflect clear growth in revenue and EBIT compared to 2019, supported by the acquisitions made during 2019. A guidance reflecting significant growth this early in 2020 would be a positive sign. We expect a sales growth of around 10% and growth in EBIT of 8% in 2020.

HOLD with a target price of EUR 10.6 (9.6)

Valuation multiples for both peers and Etteplan have increased post-Q3 and current valuation does not appear particularly attractive, although Etteplan still remains on good track. We raise our target price with the increased peer multiples and value Etteplan at 15x 2019E P/E, for a target price of EUR 10.6 (9.6) and retain our HOLD-rating.

Etteplan - Continued good performance

04.11.2019 | Company update

Etteplan’s Q3 results were better than expected, with both revenue and EBIT beating our estimates. EBIT was aided by net one-offs of EUR 0.8m, at EUR 5.7m (Evli 4.9m). Revenue growth was 17.0%, with a respectable 5.1% organic growth given continued market uncertainty. The comments on market outlook saw some continued signs of slow-downs, without any major changes. We retain our HOLD-rating with a target price of EUR 9.6.

Exceptional Q3 profitability boosted by one-offs

Etteplan’s Q3 results were better than we had expected. Revenue amounted to EUR 61.5m (Evli 59.1m), with the difference mainly due to higher sales in Engineering solutions. Growth was driven by acquisitions made during Q2-Q3/19, with revenue growth at 17.0% y/y, of which 5.1% organic growth. EBIT was above our expectations at EUR 5.7m (Evli 4.9m) due to non-recurring items of EUR 0.8m, including a EUR 1.1m impact from a revaluation of the earn-out in the Eatech acquisition. Challenges in Germany also continued to have an effect on profitability.

No major changes in market outlook

The market outlook continued to reflect the more challenging environment posed by uncertainty in the global economy. Comments on demand outlook point towards some slow-down and the situation in China continued to be challenging, with a decline in hours sold y/y. However, no signs of any larger deterioration in the overall demand situation was observable and according to Etteplan remained generally at a good level.

HOLD with a target price of EUR 9.6

Our top-line estimates remain largely unchanged post Q3. We have made some adjustments to our coming year estimates due to a readjustment of amortization of acquisition fair value adjustments, with our 2020-2021 EBIT estimates down by some 5%. With only minor estimates revisions and the continued uncertainty in demand outlook, we retain our HOLD-rating with a target price of EUR 9.6.

Etteplan - Good Q3 figures

31.10.2019 | Earnings Flash

Etteplan's net sales in Q3 amounted to EUR 61.5m, slightly above our estimates and in line with consensus (EUR 59.1m/60.4m Evli/cons.). EBIT amounted to EUR 5.7m, above our and consensus estimates (EUR 4.9m/4.9m Evli/cons.), in line with our and consensus estimates after excluding EUR 0.8m one-offs.

  • Net sales in Q3 were EUR 61.5m (EUR 52.6m in Q3/18), slightly above our estimates and in line with consensus estimates (EUR 59.1m/60.4m Evli/Cons.). Growth in Q3 amounted to 17.0 % y/y, of which 5.1 % organic growth.
  • EBIT in Q3 amounted to EUR 5.7m (EUR 4.4m in Q3/18), above our estimates and consensus estimates (EUR 4.9m/4.9m Evli/cons.), at a margin of 9.3 %. EBITA amounted to EUR 6.6m (Evli EUR 5.5m), at a margin of 10.7%. Q3 EBIT/EBITA was improved by one-off items of EUR 0.8m related to a revaluation of the earn-out in the Eatech acquisitions.
  • EPS in Q3 amounted to EUR 0.19 (EUR 0.13 in Q3/18), above our estimates and consensus estimates (EUR 0.15/0.15 Evli/cons.).
  • Engineering Solutions: Net sales in Q3 were EUR 35.3m vs. EUR 31.9m Evli. EBITA in Q3 amounted to EUR 3.4m vs. EUR 3.0m Evli.
  • Software and Embedded Solutions: Net sales in Q3 were EUR 15.4m vs. EUR 15.8m Evli. EBITA in Q3 amounted to EUR 1.6m vs. EUR 1.6m Evli.
  • Technical Documentation Solutions: Net sales in Q3 were EUR 10.7m vs. EUR 11.5m Evli. EBITA in Q3 amounted to EUR 0.8m vs. EUR 1.0m Evli.
  • The MSI-% of sales improved above 60% for the first time.

Etteplan - Acquisitions boosting growth

24.10.2019 | Preview

Etteplan reports Q3 results on October 31st. The guidance revision in Q2 and steady development track should limit information value from financial figures of the seasonally slower quarter. Macro uncertainties, however, continue to pose a risk on demand. The acquisitions made during mid-2019 will bolster growth while opening some room for estimates deviations. Market outlook comments remain of key interest but will likely remain limited given the near-term uncertainties relating to the trade war and Brexit.

Acquisitions to boost growth in seasonally slower quarter

Etteplan raised its guidance in Q2, largely due to acquisitions made in mid-2019, expecting revenue and EBIT for 2019 to grow significantly compared to 2018. With the revised guidance and the stable development that Etteplan has shown, results of the seasonally slower Q3 should not be particularly eventful, although the recent acquisitions may likely cause some estimates deviation due to lack of comparison figures. We expect revenue to amount to EUR 59.1m, with a growth of 12.5%. We expect over 10% growth in all service areas, with Engineering Solutions in particular boosted by the acquisitions. We expect an EBITA-margin of 9.3%.

Market outlook comments remain of interest

Our interest in the Q3 results will remain focused on remarks regarding market outlook and any possible comments on the outlook for 2020, as we are rather confident in the 2019 guidance being reached. Given the near-term nature of key uncertainties (Brexit and U.S-China trade war) forward-looking comments will likely still be limited. Some small positive signs have been seen post-Q3 but without agreements the uncertainty will likely continue to have an effect on investment decisions.

HOLD with a target price of EUR 9.6

We have not made changes to our estimates ahead of Q3. We retain our HOLD-rating and target price of EUR 9.6 intact.

Etteplan - Narrative largely unchanged

14.08.2019 | Company update

Etteplan’s Q2 results were slightly below our and consensus estimates but at a good level nonetheless. Etteplan upgraded its guidance mainly driven by the acquisitions made. The market comments were mostly unchanged, with some hints of weakened demand. We retain our HOLD rating with a target price of EUR 9.6.

Below estimates, acquisition driven guidance upgrade

Etteplan’s Q2 results were slightly below our and consensus estimates, but continued to be at a good level nonetheless. Revenue grew 3.7% to EUR 64.3m (Evli/cons. 66.6m/66.4m), with organic growth falling clearly to 1.2%, although impacted by working day differences. Profitability surpassed the target level, with EBITA at 6.5m (Evli 6.9m) for a margin of 10.1%. Etteplan further upgraded its guidance (prev. upgrade in Q1) following the acquisitions made during Q2/Q3, expecting its revenue and operating profit for 2019 to grow significantly (prev. clearly) compared to 2018. Market outlook comments were mostly neutral compared to Q1, with some signs of negative development for instance in China.

No major estimates revisions

Our estimates remain mostly unchanged post-Q2, as we had already included the acquisitions in our estimates. Profitability of the acquired companies had not been given pre-Q2 but management comments implied similar profitability to Etteplan or possibly better when accounting for synergies, in line with our expectations. We expect revenue growth of 11.4% in 2019 (2018: 10.1%) and an EBITA-margin of 9.9% (2018: 9.5%).

HOLD with a target price of EUR 9.6

The prevailing uncertainty in customer activity and the lower organic growth in Q2, although affected by working day differences, gives continued reasons for caution while the upgraded guidance did reduce some near-term uncertainty. With no major changes to our estimates, we retain our HOLD-rating and target price of EUR 9.6.

Etteplan - Upgrades guidance

13.08.2019 | Earnings Flash

Etteplan delivered solid Q2 results, although slightly below Evli and consensus estimates. Etteplan's net sales in Q2 amounted to EUR 64.3m, slightly below our and consensus estimates (Evli/cons. EUR 66.6m/66.4m). EBITA amounted to EUR 6.5m compared to our estimates (Evli EUR 6.9m). Etteplan upgraded its guidance, expecting the revenue and operating profit (EBIT) for the year 2019 to grow significantly (prev. clearly) compared to 2018.

  • Net sales in Q2 were EUR 64.3m (EUR 62m in Q2/18), slightly below our estimates (Evli EUR 66.6m). Growth in Q2 amounted to 3.7 % y/y.
  • EBITA in Q2 amounted to EUR 6.5m (EUR 6.2m in Q2/18), slightly below our estimates (Evli EUR 6.9m), at a margin of 10.1 %.
  • Engineering Solutions: Net sales in Q2 were EUR 35.3m vs. EUR 36.4m Evli. EBITA in Q2 amounted to EUR 3.8m vs. EUR 3.9m Evli. The MSI-% in Q2 was 57 % compared to 52 % in Q2/18.
  • Software and Embedded Solutions: Net sales in Q2 were EUR 17.1m vs. EUR 17.9m Evli. EBITA in Q2 amounted to EUR 1.6m vs. EUR 1.8m Evli. The MSI-% in Q2 was 55 % compared to 46 % in Q2/18.
  • Technical Documentation Solutions: Net sales in Q2 were EUR 11.8m vs. EUR 12.4m Evli. EBITA in Q2 amounted to EUR 1.0m vs. EUR 1.2m Evli. The MSI-% in Q2 was 75 % compared to 73 % in Q2/18.
  • Overall development of Etteplan’s business environment remains favourable.
  • Guidance updated: Etteplan expects the revenue and operating profit (EBIT) for the year 2019 to grow significantly (prev. clearly) compared to 2018.

Etteplan - Executing growth strategy

08.08.2019 | Preview

Etteplan will report Q2 results on August 13th. Etteplan has during and after the quarter made acquisitions with a combined number of employees of over 250, expected to have an insignificant impact on Q2 but to aid in achieving the FY2019 guidance amid continued global uncertainty. We expect minor overall margin improvement y/y in Q2 while still remaining cautious to margin development in Technical Documentation Solutions. Following the post-Q1 share price rally we downgrade our rating to HOLD (BUY) with a target price of EUR 9.6.

Executing its M&A aided growth strategy

Our estimates ahead of Q2 remain intact apart from adjustments made for the acquisitions of Devex Mekatronik (Sweden) and EMP Engineering Alliance (Germany). The two companies combined had revenue of around EUR 26m and over 250 employees in 2018. To our understanding the revenue generated will mainly fall under Engineering Solutions and a smaller share under Software and Embedded Solutions. Our 2019 and 2020 net sales estimates are up by some 3% and 8% respectively. For Q2 we expect net sales and EBITA of EUR 66.6m (Q2/18: 62.0m) and EUR 6.9m (Q2/18: 6.2m).

Market outlook comments of interest

Etteplan expects its revenue and operating profit for 2019 to grow clearly compared to 2018. The acquisitions made will certainly aid in achieving the guidance and reduces 2020 sales growth concerns, but recent macro development still warrants cautionary remarks and our focus in the Q2 report will be on market outlook comments.

HOLD (BUY) with a target price of EUR 9.6

Etteplan’s share price has climbed after the Q1 guidance upgrade and although still at a slight discount to peers, valuation is looking fairer when also considering Etteplan’s historical valuation. We downgrade our rating to HOLD (BUY) and retain our target price of EUR 9.6.

Etteplan - A good start for the year

09.05.2019 | Company update

Etteplan’s Q1 saw all business areas achieving margins near the financial target of a 10% EBITA-margin. With a good order backlog development during the beginning of the year Etteplan also raised its guidance for 2019. We expect a 2019 revenue and EBITA of EUR 258.6m and 26.0m respectively. We retain our BUY rating with a target price of EUR 9.6 (9.0).

Good performance across the board and guidance upgrade

Etteplan’s Q1 results were good across the board, with especially profitability beating our estimates, driven by better than expected profitability in Engineering Solutions and Technical Documentation Solutions. Revenue also saw good growth of 11.3% in the quarter following a continued good demand situation despite market uncertainties. Etteplan upgraded its guidance, expecting the revenue and operating profit for 2019 to grow clearly (prev. only grow) compared to 2018.

Technical Documentation Solutions still faces challenges

Etteplan’s Q1 results showed little weakness, as although the on-going trade war did have some impact on the development in China, the significant new orders signed, the guidance upgrade and customer order backlog development alleviate some of the near-term uncertainty. The Technical Documentation Solutions business area remains the likely subpar performer due to elevated costs related to a larger project in Germany. Our revised revenue and EBIT estimates are 258.6m and 23.4m respectively, implying an increase of 9.4% and 12.4% from 2018 figures.

BUY with a target price of EUR 9.6 (9.0)

On our estimates Etteplan trades at a 26% and 12% discount on 2019E peer median EV/EBITDA and P/E. With our increased estimates and lesser near-term uncertainty we raise our target price to EUR 9.6 (9.0), valuing Etteplan at a P/E and EV/EBITDA of 13.5x and 7.6x respectively, and retain our BUY-rating.

Etteplan - Earnings beat and guidance upgrade

08.05.2019 | Earnings Flash

Etteplan’s Q1 results beat expectations especially for profitability, with EBIT at EUR 5.8m (EUR 5.2m/5.1m Evli/cons.) and revenue at EUR 65.6m (EUR 63.5m/64.0m Evli/cons.). Performance was solid across all business areas. Etteplan upgraded its guidance and now expects its revenue and operating profit for the year 2019 to grow clearly compared to 2018.

  • Etteplan’s net sales in Q1 amounted to EUR 65.6m (EUR 59.0m in Q1/18), slightly above our estimates (Evli EUR 63.5m). Sales growth in Q1 amounted to 11.3% y/y (organic growth 7.0%).
  • EBITA in Q1 was EUR 6.4m (EUR 4.9m in Q1/18), above our estimates (Evli EUR 5.8m), at a margin of 9.8%.
  • Engineering Solutions: Net sales in Q1 were EUR 35.6m vs. EUR 35.5m Evli. EBITA in Q1 was EUR 3.7m vs. EUR 3.2m Evli.
  • Software and Embedded Solutions: Net sales in Q1 were EUR 17.3m vs. EUR 16.4m Evli. EBITA in Q1 was EUR 1.7m vs. EUR 1.7m Evli.
  • Technical Documentation Solutions: Net sales in Q1 were EUR 12.5m vs. EUR 11.6m Evli. EBITA in Q1 was EUR 1.2m vs. EUR 0.9m Evli.
  • Guidance upgraded: Etteplan expects its revenue and operating profit for the year 2019 to grow clearly (added) compared to 2018.

Etteplan - Upgrade to BUY

03.05.2019 | Company update

Etteplan reports Q1 results on May 8th. We expect continued good margin development in Engineering Solutions, and Software and Embedded Solutions. Project delivery challenges are expected to continue to have an impact on margins in Technical Documentation Solutions. With valuation looking more attractive due to peer multiple elevation we upgrade to BUY (HOLD) with a TP of EUR 9.0.

Expect stable development

Our estimates ahead of Q1 remain largely intact, with some minor adjustments mainly to incorporate the transition from EBIT from business operations to EBITA as Etteplan’s measure for operational profitability following updated strategic and financial targets in April. Our group level Q1 revenue and EBITA estimates are at EUR 63.5m and EUR 5.8m respectively. We expect continued good margins in Engineering Solutions and Software and Embedded Solutions while still remaining cautious to margin improvement in Technical Documentation Solutions due to project delivery challenges in Germany.

Uncertainty has decreased but remains a key topic

The uncertainty relating to the development of the global economy remains a key topic as the development of macroeconomic indicators and sentiment has been mixed but in general more positive considering the uncertainty during the latter half of 2018. Both customer engineering companies’ and peers’ valuation have been on the rise during 2019. The order intake among engineering companies has also been positive, with the aggregate value for a selection of customer companies up some 7% y/y.

BUY (HOLD) with a target price of EUR 9.0

The valuation of peer companies has been on the rise during 2019, while Etteplan has been largely unaffected, and as such trades on a discount compared to peers. On 2019E P/E Etteplan trades at an in our view unjustifiably large discount of ~20%. We retain our target price of EUR 9.0 but upgrade our rating to BUY (HOLD).

Etteplan - Remaining on track

08.02.2019 | Company update

Etteplan posted good Q4 results, although slightly below our estimates, with net sales at EUR 62.9m (Evli 66.0m) and EBIT at 5.7m (Evli 6.2m), affected at least partly by the impact of vacation timing and activities of two major customers in December. The market outlook remains encouraging and Etteplan expects revenue and operating for 2019 to grow compared to 2018. Our estimates remain largely unchanged and we retain our HOLD-rating with a target price of EUR 9.0.

Market outlook and guidance remaining favourable

Etteplan posted good Q4 results, although falling slightly below our estimates due at least partly to the impact of vacation timing and activities of two major customers in December. The Technical Documentation continued to see challenges while Embedded Systems and IoT saw solid development, as actions to improve profitability have taken effect. Etteplan expects the revenue and operating profit for the year 2019 to grow compared to 2018. Comments regarding the market outlook were encouraging, as Etteplan continues to see favorable development in all market areas but with demand growth in Europe expected to slow down slightly. The BoD’s dividend proposal for 2018 is EUR 0.30 per share, in line with expectations.

Estimates largely unchanged post-Q4

Our estimates remain largely unchanged post-Q4. We have raised our estimates for profitability for Embedded Systems and IoT after the solid performance in Q4. We expect net sales and EBIT BO of EUR 251.6m and EUR 24.7m respectively, with margins near Etteplan’s strategic target of 10%. We do not expect the growth target of 15% to be reached without acquisitions.

HOLD with a target price of EUR 9.0

On our estimates Etteplan trades largely in line with peers on 2019E EV/EBIT and P/E. With our estimates largely unchanged we retain our HOLD-rating with a target price of EUR 9.0.

Etteplan - Expecting revenue and operating profit growth to continue

07.02.2019 | Earnings Flash

Etteplans Q4 revenue (EUR 62.9m/66.0m Act./Evli est.) and EBIT (EUR 5.7m/6.2m Act./Evli est.) fell slightly below our estimates but remained at good levels nonetheless. Etteplan expects its revenue and operating profit for the year 2019 to grow compared to 2018. The BoD proposes a dividend of EUR 0.30 per share (Evli EUR 0.30).

  • Net sales in Q4 were EUR 62.9m (EUR 58.5m in Q4/17), slightly below our estimates (Evli EUR 66m). Growth in Q4 amounted to 7.5 % y/y.
  • EBIT in Q4 was EUR 5.7m (EUR 4.6m in Q4/17), below our estimates (Evli EUR 6.2m), at a margin of 9.1 %.
  • Engineering services: Net sales in Q4 were EUR 34.6m vs. EUR 37m Evli. EBIT BO in Q4 was EUR 3.3m vs. EUR 3.8m Evli.
  • Embedded systems and IoT: Net sales in Q4 were EUR 16.5m vs. EUR 16.2m Evli. EBIT BO in Q4 was EUR 2.0m vs. EUR 1.7m Evli.
  • Technical documentation: Net sales in Q4 were EUR 11.7m vs. EUR 12.8m Evli. EBIT BO in Q4 was EUR 1.0m vs. EUR 1.2m Evli.
  • Etteplan sees its business environment continuing to develop favorably in all market areas while demand growth in Europe is expected to slow down slightly due to political uncertainty.
  • Dividend proposal: Etteplan’s BoD proposes a dividend of EUR 0.30 per share (Evli EUR 0.30).
  • Guidance: Etteplan expects its revenue and operating profit for the year 2019 to grow compared to 2018. The guidance is in line with our expectations

Etteplan - Outlook in focus

30.01.2019 | Preview

Etteplan reports Q4 results on February 7th. With signs of slower growth in the global economy the market outlook and guidance are of key interest. We expect the Q4 results to show good performance, with our revenue and EBIT BO estimates at EUR 66.0m and 6.7m (Q4/17: 58.5m and 5.4m) respectively. We expect a dividend proposal of EUR 0.30 per share. With valuation looking fairer after share price inclines we downgrade to HOLD (BUY) with a target price of EUR 9.0.

Comments on market outlook and guidance of key interest

The growth in the global economy has been showing signs of slowdowns due to among other things the US-China trade war and changes in GDP growth forecasts for the near-term have been seeing a slightly declining trend. An adverse shift in engineering companies’ willingness to make investments would have an effect on the engineering services sector. As the effect of any weaker demand is not yet clearly comprehensible Etteplan’s comments on the market outlook along with the guidance for 2019 are of key interest. Despite increased uncertainty we still expect guidance to reflect growth in revenue and operating profit.

Expect DPS proposal of EUR 0.30

Our estimates ahead of Q4 remain intact. Our Q4 revenue and EBIT BO estimates are at 66.0m and 6.7m respectively. Etteplan has not specified a dividend policy but as the dividend has typically corresponded to around 50 % of EPS, we expect a dividend proposal of EUR 0.30 per share.

HOLD (BUY) with a target price of EUR 9.0

Etteplan’s share price has seen increases during 2019 and valuation when comparing to peers seems fair. We value Etteplan at 8.8x 2019E EV/EBITDA. We downgrade our rating to HOLD (BUY) with a target price of EUR 9.0.

Etteplan - More than just an engineering company

29.11.2018 | Company report

Etteplan has seen favourable development in the past few years following improving market conditions. Market uncertainty has increased recently and we expect organic growth figures to slow down going in to 2019. Acquisitions remain essential in achieving the 15 % average growth target. Margins are close to the 10 % EBIT from business operations target, under some pressure but with room for improvements. We retain our BUY-rating with a target price of EUR 9.0 (9.5).

Market uncertainty casting a shadow on sales growth

Etteplan’s revenue in 2017 and during Q1-Q3/2018 increased by 16.8 % and 11.1 %, of which organic growth amounted to 10.4 % and 7.6 %, supported by improved market conditions from early 2017 onward. With some uncertainty relating to market development visible we expect organic growth to slow down going in to 2019 and achieving the target of an average growth of 15% would in our view require further acquisitions.

Margins near 10 % target

Etteplan has during 2018 been able to achieve group EBIT from business operations margins of close to the 10 % target (9.1 % during Q1-Q3/2018). A key driver for profitability has been Engineering Services due to the good demand situation and improved operational efficiency. We see some pressure on the already exceptionally good margins in the service area, while Embedded Systems and IoT as well as Technical Documentation in our view still have room for margin development.

BUY with a target price of EUR 9.0

Compared to peer 2019E and 2020E multiples Etteplan trades at a discount. Increased uncertainty in coming years market development warrants some caution but the ’19- ‘20E discount of ~20 % to peer ‘19E and ‘20E EV/EBITDA does not appear justified. We value Etteplan at 8.8x 2019E EV/EBITDA, giving a target price of EUR 9.0 (9.5) and BUY recommendation.

Etteplan - Continued improvement

31.10.2018 | Company update

Etteplan’s Q3 results on group level were quite in line with our estimates. Engineering services and Embedded Systems and IoT continued to improve, while Technical documentation saw continued problems in Germany. The market outlook remains favourable albeit with increased uncertainty. We retain our BUY-rating with a TP of EUR 9.5 (10.0).

Continued improvements

Etteplan’s Q3 results were on group level quite in line with our expectations. Revenue amounted to EUR 52.6m (Evli EUR 54.5m) and EBIT from business operations EUR 4.8m (Evli EUR 4.7m). Engineering services continued on a very good track, with sales growth of 11.4 % and an EBIT BO margin of 10.0 %. The measures to improve profitability in Embedded Systems and IoT have shown results and the EBIT BO margin increased to 9.8 % (7.4 % in Q3/17). Technical documentation was weighed down by continued challenges in Germany, with the EBIT BO margin at 8.0 %.

Market outlook remains favourable, increased uncertainty

No major changes were noted in the market outlook, although uncertainty has increased, and Etteplan expects a favourable end of the year. We have not made any major changes to our estimates. We remain cautious to improvements in profitability in Engineering services due to already solid levels. We expect improvement in Technical documentation as the problems in Germany appear to have been alleviated. Embedded Systems and IoT has seen improvements but still lies below previously achieved levels. The availability of professionals in the area is limiting growth and we see continued M&A activity in the area as likely. Our 2018 net sales and EBIT BO estimates are EUR 239.5m and EUR 22.9m respectively.

BUY with a target price of EUR 9.5 (10.0)

Etteplan trades on a ~20 % and ~15% discount on 19E EV/EBITDA and P/E, which we do not consider as justifiable. We retain our BUY-rating with a target price of EUR 9.5 (10.0)

Etteplan - In line with expectations

30.10.2018 | Earnings Flash

Etteplan posted solid Q3 results, largely in line with our estimates. Net sales amounted to EUR 52.6m (Evli 54.5m) and EBIT from business operations was EUR 4.8m (Evli 4.7m). Development was good in Engineering services and Embedded Systems and IoT, while Technical documentation continued to see some weakness. The demand situation is expected to remain good throughout the end of year despite some market uncertainty.

  • Net sales in Q3 were EUR 52.6m (EUR 47.1m in Q3/17), slightly below our estimates (Evli EUR 54.5m). Sales growth in Q3 was 11.6 % y/y.
  • EBIT in Q3 was EUR 4.4m (EUR 2.9m in Q3/17), slightly above our estimates (Evli EUR 4.2m), at an EBIT-margin of 8.3 %.
  • Engineering services: Net sales in Q3 were EUR 28.8m vs. EUR 29m Evli. EBIT BO in Q3 was EUR 2.9m vs. EUR 2.5m Evli. The MSI-% in Q3 was 52 % compared to 53 % in Q3/17.
  • Embedded systems and IoT: Net sales in Q3 were EUR 13.6m vs. EUR 14.4m Evli. EBIT BO in Q3 was EUR 1.3m vs. EUR 1.2m Evli. The MSI-% in Q3 was 46 % compared to 53 % in Q3/17.
  • Technical documentation: Net sales in Q3 were EUR 10.1m vs. EUR 11.1m Evli. EBIT BO in Q3 was EUR 0.8m vs. EUR 1m Evli. The MSI-% in Q3 was 74 % compared to 78 % in Q3/17.
  • The demand situation is expected to remain good in Q4 despite some market uncertainty.

Etteplan - Upgrade to BUY

22.10.2018 | Preview

Etteplan reports Q3 earnings on October 30th. Etteplan has apart from smaller problems in the Technical documentation and Embedded Systems and IoT business areas seen steady progress and we do not expect Q3 to have changed the trend. Profitability in Engineering Services has reached solid levels and we expect to see margin development slowing down in the near future. With recent share price development valuation looks more attractive. We upgrade to BUY (HOLD) with a TP of EUR 10.

Profitability at healthy levels, still room for improvement

Etteplan’s EBIT from business operations margin improved to 9.7 (8.6 in Q2/17) per cent in Q2/18, driven by profitability developments in Engineering Services, while margins in Technical documentation and Embedded Systems and IoT saw flattish development y-on-y. The EBIT BO margin in Engineering services reached 10.7 % and has according to management reached solid levels. We expect margin improvement in Embedded Systems and IoT due to a weaker comparison period. In Technical documentation delays in a significant project delivery has impacted on margins and we expect this to still have some effect on Q3.

Seasonally slower quarter

We have not made changes to our estimates ahead of Q3. Market conditions have remained favorable and along with the acquisition of Eatech we expect continued good growth in Q3. Our net sales and EBIT BO estimates for Q3 are EUR 54.5m and EUR 4.7m respectively.

BUY (HOLD) with a target price of EUR 10

Following recent share price development valuation again looks more favourable. We upgrade to BUY (HOLD) with a target price of EUR 10.

Etteplan company presentation 25092019

Etteplan - Company presentation

25.09.2019
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Etteplan company presentation 25092019

Video presentation

Company Facts

Guidance

The revenue for 2020 is expected to increase clearly and operating profit (EBIT) to be at the same level or improve compared to 2019

Financial targets

Growth: revenue more than EUR 500m in 2024, of which over 50% from outside Finland. Profitability: 10 per cent operating profit (EBITA) of revenue. Managed Services: 75 per cent of revenue represented by Managed Services in 2024

Share price (EUR)


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