Consti - Solid performance continues

Growth exceeded our expectations in Q3

Consti’s net sales grew 13.8% y/y during the Q3/23 with the support of strong growth in Corporations business area where the main driver was shopping centre projects and Public Sector business area where the growth was supported by the ongoing school projects. The sale of Consti’s relining business had a positive effect of EUR 1m on the company’s profitability. Excluding the sale, profitability was roughly at the same level seen during Q3/22. The company’s EBIT for Q3 2023 amounted to EUR 4.8m (Q3/22 3.3m) with a margin of 5.3% (Q3/22 4.2%).

Revised FY 23E estimates push the guidance range top

With the first three quarters of the FY in the books, Consti’s EBIT stands at EUR 8.4m, not very far from the lower end of the current guidance range which stays unchanged (Consti estimates that 2023 EBIT will be in the range of EUR 9.5-13.5m). Our revised estimate for the company’s net sales is EUR 330.7m for FY 2023 and we forecast EBIT of EUR 13.4m, which pushes the top of the current guidance range. We see that the growth continues in Q4, albeit at a slower rate when compared to Q3 with similar margin levels compared to Q4/22. We have revised our growth estimates for 2024E slightly as we see increased softness in the renovation construction market. However, in our view Consti is still well positioned within the renovation segment and operates in regions which are affected to a lesser extent.

BUY with a TP of EUR 13.0 (14.0)

With our revised estimates, we adjust our target price to EUR 13 (prev. EUR 14.0). We still see the company’s valuation undemanding with multiples clearly below the peers despite Consti being active in the more stable renovation construction market. In addition to peer group multiples, Consti trades at a discount to its own historic multiple levels despite the strong performance witnessed during FY 22-23.