Consti - Onwards in a tough market

Q1 profitability only slightly weaker than expected

Net sales in Q1 were EUR 65.5m (EUR 68.9m in Q1/23), slightly above our estimates (EUR 64.5m). Sales declined 4.9% y/y. Operating profit in Q1 amounted to EUR 0.2m (EUR 0.7m in Q1/23), below our estimates (EUR 0.5m) at a margin of 0.3% (1.0%). The main driver behind the EBIT miss compared to our estimate was non-operative as the result was burdened by amortization of purchase price allocations from the previous year’s acquisition. On EBITDA terms, the miss was nearly non-existent as we expected EBITDA of EUR 1.4m vs. actual of EUR 1.3m. Order intake fell 38% y/y as Consti was not able to sign any larger orders during the quarter. The company’s backlog fell slightly with the weaker order intake yet remained at a strong level of EUR 244.4m (EUR 253.8m Q1/23).

We continue to expect slight sales decline for 2024E

With Q1/24 figures largely as expected, we have made only slight estimate adjustments going forward. According to the company, a larger share of the end of March backlog will be recognized during the remainder of the FY when compared to last year. Consti’s current backlog supports its net sales for the remainder of the year while we expect the company’s disciplined tendering activities coupled with intensified competition to affect project sales negatively. We now estimate revenue of EUR 318.0m (prev. EUR 315.5m) and EBIT of EUR 10.7m (prev. EUR 10.8m) for FY 2024E. For Q2, we estimate net sales growth as some projects in the Building Technology business area did not contribute to Q1 sales as the company expected and we estimate that these projects will start to contribute during the second quarter.

BUY with a TP of EUR 12.0 (prev. EUR 13.0)

Seasonally slow Q1 brought no major news, and the fundamentals remain intact. Consti is priced at 9-8x P/E and 7-5x EV/EBIT on our 24-25E estimates. While the market presents some challenges, we still see the valuation undemanding.