Loihde - Well on the earnings growth track

Sales growth driven earnings beat in Q1
Loihde reported Q1 results that beat our estimates. Net sales amounted to EUR 33.0m (Evli EUR 31.8m), growing some 6% y/y. We had anticipated a slower start to the year given the softness in demand seen during the previous year. Relative growth was supported by the weaker comparison period and growth in Security Solutions and Cyber and Cloud & Connect. Digital Services and Data & AI saw sales decline y/y. The cost base remained flat y/y, corresponding to our estimates. The higher than estimated growth resulted in profitability beating our estimates, with adj. EBITDA at EUR 1.6m (Evli EUR 0.5m). 

Lower single-digit growth and clear margin improvement 
According to management the growth pace during the remainder of the year is not expected to remain at levels seen in Q1. Our estimates for Q2-Q4 were in the lower single-digits and remain unchanged. Our estimates changes are solely due to the estimates beat in Q1, with our 2024E net sales and EBITDA now at EUR 137.6m (136.4m) and EUR 10.5m (9.6m). We anticipate growth driven and inflationary pressure on the cost base in H2, assuming improvements in the demand situation and as such a pick-up in growth in 2025. Our assumptions are on the cautionary side, as Loihde has managed rather well in its cost control, aided also by the operating model on the IT services side, and a more flat y/y development could still bring some 10-20% upside to our current EBITDA estimate. 

HOLD with a target price of EUR 11.8 (11.5, ex-div).
With our growth and profitability estimates up, we adjust our target price to EUR 11.8 (prev. 11.5) ex-div (EUR 1.00 per share, record date 10.5.2024e). Valuation remains challenging, with P/E on our estimates above 20x 2024-2025e, and notable upside would require a bigger leap towards the 2027 adj-EBITDA% target of 15%.