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Etteplan - Lowers 2023 guidance

Etteplan issued a profit warning and lowered its guidance for FY 2023. The profit warning doesn’t come as a surprise considering the soft H1 which increased pressure for the rest of the year, as outlined in our previous update.

Lowered guidance due to the weakening market

Due to weaker market situation, in particular in the demand of consumer product manufacturing customers in the Technical Communication Solutions, Etteplan lowers its guidance for 2023. According to the new estimate, the revenue is estimated to be EUR 355-370m (prev. EUR 360-380m) and EBIT to be EUR 26-28.5m (prev. EUR 28-31m).

 

Downward estimate revisions across the board

Our estimates after Q2 were at the lower end of the earlier guidance and roughly at the top end of the updated guidance (net sales of EUR 371.0m and EBIT of EUR 28.5m for FY 2023). The profit warning did not come as a surprise as the company’s soft H1 left little room for error in H2. With the weaker outlook, we have made multiple adjustments to our estimates for 2023E and beyond. Our updated estimate for 2023E revenue comes in at EUR 360.7m (-2.8% vs. prev. estimate) and EBIT EUR 26.6m (-6.8% vs. prev. estimate). We have made negative estimate adjustments especially for the Technical Communication Solutions segment as the segment was flagged weaker than expected due to negative changes in the demand of consumer product manufacturing customers. While the consumer segment was only 2% of the total revenue in H1 2023, we continue to see more pronounced signs of a slowdown accross Etteplan’s customer’s end markets, therefore we have also revised our growth and profitability estimates downwards beyond 2023. With the revised estimates, we no longer expect that the company reaches its target level of profitability in 2024.

 

HOLD with a target price of EUR 13.0 (15.0)

With our updated estimates, Etteplan trades at a 10-15% premium vs. our peer group on adj. EV/EBIT 23-24E basis. Driven by the adjustments to our estimates and the expected near-term pressure due to weak market sentiment, we further decrease our target price to EUR 13.0 (15.0) while keeping our rating at HOLD.

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