Consti - Good growth, minor margin concerns

Consti reported good Q3 results, with growth picking up better than anticipated and profitability improving y/y. Construction material costs and availability cause some concern for margins in coming quarters but overall, the outlook still remains favourable. We retain our target price of EUR 14.5 and BUY-rating.

Overall better than expected Q3 results
Consti reported overall good Q3 results and the anticipated pick up in growth was clearly visible. Revenue grew 11.4% to EUR 76.0m (EUR 73.3m/73.0m Evli/cons.), with clear growth in housing companies’ revenue. Profitability also beat our expectations, with EBIT of EUR 3.1m (EUR 2.7m Evli/cons.) and a 0.2pp y/y increase in the EBIT-margin. The order backlog continued to develop favourably, up 15% y/y at EUR 217.9m. Consti reiterated its 2021 EBIT guidance of EUR 4-8m.

Growth picking up, some margin uncertainty
We have slightly raised our estimates in light of the accelerated growth in Q3. We expect an average annual growth of approx. 7% during 2021-2022 (prev. ~3.5%). Growth is driven by the improved order backlog and activity levels and also by the acquisition of RA-Urakointi during the quarter. Demand in the housing market appears to be at healthy levels again, while demand within commercial premises is still seeing recovery. In terms of margins we still remain somewhat on the cautionary side, expecting similar levels during 2021-2022 as seen in 2020 (adj. EBIT-%: 3.4%). The impact of construction material costs and availability did not significantly impact Q3 but will according to the company have a larger impact in Q4. We assume that the impact could also be visible at least during the first quarter of 2022.

BUY with a target price of EUR 14.5
With our estimates revisions ultimately relatively small, we retain our target price of EUR 14.5 and BUY-rating. Our target price values Consti at 14.1x 2022E P/E, roughly on par with the construction peers.

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