Consti - Facing tougher comparables

Market conditions should start to improve

Based on the latest estimate by The Confederation of Finnish Construction Industries RT, Finnish renovation construction volumes should turn to slight growth in 2025 followed by relatively strong volume decline during 2023-2024 (-7% and -4% respectively). The Finnish Association of HVAC Technical Contractors' sentiment survey shows a slight improvement, with indexes continuing to rise from their H2/23 lows in residential, non-residential, and public renovation construction sectors. The main drivers behind the improved market sentiment are the slowdown of construction cost inflation and decreasing interest rates. 

Facing tougher comparables in Q3

Consti faces tough comparable figures as net sales grew 13.8% y/y in Q3/23 to EUR 89.9m and operating profit amounted to EUR 4.8m (EUR 3.3m in Q3/22), at a margin of 5.3% (4.2%), partly helped by a gain recognized on a business sale (EUR 1m positive EBIT effect). For Q3/24 we estimate net sales of EUR 85.1m and EBIT of EUR 3.2m. On the segment level, we expect Housing Companies to grow driven by improved backlog. For Corporations, we expect flat sales for H2, while for Q3 we estimate sales decline against a tough comparison period. In the Public Sector segment, we expect sales to decline y/y in H2 due to the tougher comparable period and lower backlog. For Building Technology, we expect strong growth to continue albeit at a slightly lower pace compared to the first half.

BUY with a TP of EUR 13.0 (prev. EUR 12)

Despite the recent share price surge, the company’s valuation remains undemanding. Consti is priced at 9-7x EV/EBIT and 12-9x P/E based on our estimates for 2024-25E. The valuation presents a significant discount compared to both peer companies and the company’s own historical multiple levels.