Loihde - Cautiously heading into 2024

Q4 quite in line with expectations
Loihde’s net sales came in line with our expectations, with net sales growing by 3% to EUR 37.3m (Evli: 37.3m). The growth was driven by Security Solutions, up 5% y/y to EUR 26.7m (Evli: 26.8m), while net sales in Digital Development declined by 2% to EUR 10.4m (Evli EUR 10.6m). The adj. EBITDA came in below our expectations, at EUR 3.8m (Evli: EUR 4.4m), largely driven by an EUR 0.4m write-down of receivables. The guidance was in our view arguably on the softer side, with revenue expected to be on par with 2023 or grow and the adjusted EBITDA to improve from 2023. The BoD proposes a dividend of EUR 1.0 per share (Evli EUR 0.15), in our view likely the last exceptionally high dividend compared with financial performance.

Fairly modest expectations for 2024
With the guidance and market situation providing limited signs of growth, along with growth in the cost base in comparable terms due to wage inflation, the expectations for 2024 appear moderate at best. We still expect a notable improvement in profitability due to weaker comparison figures and slight growth (2024e: 2.8%) but our 2024e EBITDA-margin estimate of 7% still lags clearly behind the long-term target of 15% (by 2027). While H1 will likely remain somewhat on the softer side, we assess that with a more likely improvement in the demand situation, as opposed to further degradation, as well as internal strategic work and shift in operating models, growth should be more favourable during H2.  

HOLD with a target price of EUR 11.5 (ex-div)
Although upside potential remains quite considerable on the long-term targets, with the elevated current multiples and assessed improvement pace valuation in our view remains on relatively fair levels. We adjust our TP to EUR 11.5 (ex-div, prev. EUR 12.3) and retain our HOLD-rating.