Consti - Closing out another solid year

Strong performance during the first three quarters

Consti’s net sales grew by 10.7% y/y during 1-9/23 from EUR 212.0m during 1-9/22 to EUR 234.5m. Growth was driven by the Corporations and Public Sector segments where the company has had major projects such as school and shopping center projects underway. The company’s EBIT for the first nine months amounted to EUR 8.4m (EUR 6.6m 1-9/22) with a margin of 3.6% (3.1%). Profitability improved yet was affected by cost inflation. Consti recognized a gain of roughly EUR 1m on the sale of property-related relining business which supported the profitability in Q3. At the end of Q3, the company’s backlog was near ATH levels at EUR 247.3m, up 17.5% y/y yet down nearly the same amount q/q.

Focus is on the backlog development and guidance for FY24

We maintain our estimate for net sales at EUR 96.1m with growth of roughly 3% y/y. We see the y/y growth slowing down from Q3 as the company faces a tougher comparison period in Q4. We have revised our profitability estimate slightly as we think that Consti's profitability has still been impacted by cost inflation. Our updated EBIT estimate for Q4 is EUR 4.8m (prev. EUR 5.0m), implying EBIT of EUR 13.3m (adj. EBIT EUR 12.3m) for FY 23. With the estimated solid Q4, our focus shifts to backlog trends and FY 24 guidance. The addition of two major projects to the Q4 backlog is positive, yet further small project wins are necessary for sustained backlog growth. Our FY 24 forecasts have been slightly updated, factoring in Sähkö-Huhta acquisition for inorganic growth. We've also tweaked the Corporations segment growth estimates, now expecting group wide net sales of EUR 341.6m with a 3.3% y/y increase and an EBIT of EUR 13.3m for FY 2024.

Valuation remains attractive