Etteplan - Difficulties continued during Q4

Guidance allowed little margin for error in Q4

In its interim report published in October, the company estimated its revenue in 2023 to be EUR 355-370m and EBIT EUR 26-28.5m. Etteplan's Q3 was soft and as we commented in our Q3 company update, it made Q4 more challenging to achieve the guidance. The guidance implied revenue of roughly EUR 90-105m and EBIT of roughly EUR 9-11m for Q4. According to the preliminary figures, the company’s Q4 net sales came in at roughly EUR 94m and EBIT was EUR 8.1 m, for FY, the company net sales were at EUR 359m and EBIT at EUR 25.4m. We forecasted net sales of EUR 360.4m and EBIT of EUR 26.0m for FY 2023. Our prediction for net sales was close to the actual results, but the actual EBIT was 2.3% lower than our prediction. The main causes for the EBIT shortfall were the ongoing weak market, the high rate of sick leaves and more holidays taken than expected during Christmas time. As the guidance was tight, the problems quickly led to the EBIT shortfall.

Acquisitions provide a slight boost to net sales for FY 2024

We have adjusted our model in accordance with the preliminary numbers for FY 2023, in addition, we have made some changes to our FY 2024 forecasts. We now expect net sales of EUR 380.5m for FY 2024 (prev. 369.4m) driven by the acquisitions completed during H2 2023. In terms of profitability, we still anticipate a margin increase vs. FY 2023, yet the visibility remains low. Our revised FY 2024 EBITA forecast is EUR 35.4m, up from EUR 34.9m, due to anticipated higher net sales and year-over-year profitability improvement. We have also reduced our margin estimates for some of the segments.

HOLD with a TP of EUR 13.0

The valuation is still reasonable with our updated estimates. Etteplan trades at a premium of roughly 13% when compared to our peer group on 23-24E EV/EBITDA basis, yet roughly in line with its own historic multiple levels. We retain our rating at HOLD with a TP of EUR 13.0.