Consti - Smooth sailing

Consti’s Q2 report provided no real surprises, and the figures were largely in line with our estimates. Our focus for Q2 was on the company’s order intake which came in strong at EUR 106.5m in Q2 (Q2/22: EUR 98.7m). We see continued steady development going forward backed by the healthy backlog.

Q2 results were in line with our estimates

Q2 net sales were EUR 75.7m (compared to EUR 73.1m in Q2/22), roughly in line with our and consensus estimates (EUR 79.8m/77.7m Evli/cons.). Sales grew 3.6% y/y. Operating profit in Q2 was EUR 3.0m (EUR 2.9m in Q2/22), aligning with our and consensus estimates (EUR 3.1m/3.1m Evli/cons.) at a 4.0% margin. EPS in Q2 was EUR 0.29 (EUR 0.28 in Q2/22), in line with our and consensus estimates (EUR 0.29/0.29 Evli/cons.). Cash flow generation was strong during the quarter, with free cash flow improving to EUR 4.1m (EUR 2.6m in Q2/22) due to good profitability and released working capital.

 

Improved backlog strengthens future outlook

Consti’s order backlog kept growing both y/y and q/q as it reached new record level of EUR 297.9m, the improved backlog strengthens outlook for H2 and 2024. As the company’s development was steady during the first half of 2023, we have made only slight adjustments to our estimates. After the minor adjustments, we forecast revenue of EUR 321.9m for 2023 with EBIT of EUR 12.2m. Consti kept its guidance for 2023 unchanged as it estimates EBIT of EUR 9.5–13.5m for the FY. Our estimate for EBIT sits above the middle point of the guidance. We estimate that the company maintains similar profitability level compared to H2 2022 despite increased volumes, due to expected cost inflationary pressure.

 

BUY with TP of EUR 14.0

We base our valuation of Consti on both the company’s own historic multiple levels and relative valuation. Based on our estimates for 2023, the company trades at 8.9x P/E and 6.3x EV/EBIT. In our view, Consti's current price undervalues its current form, and the valuation remains attractive.

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