Vaisala - Accelerating towards the year-end

First quarter was nearly as soft as expected

Vaisala’s Q1 net sales were in line with the preliminary figures at EUR 112.1m. The sales decline was driven by the industrial actions in Finland and simultaneous ramp-up of the new ERP system as previously communicated by Vaisala. On the positive side, W&E’s gross margin developed more favorably than expected with improved business mix. In addition, the company was able to scale its OPEX in accordance with the lower volumes. Driven by these measures, Vaisala’s EBIT came in at EUR 7.1 (Evli est. EUR 5.3m/Cons. est. EUR 3.2m), beating our estimates slightly. The company’s order book finished up at a record level of EUR 190.4m while order intake decreased 7% as a result of continued subdued market.

Estimating improvement for the remainder of the FY 24

Vaisala’s order book remains at a solid level despite the decline in order intake. According to Vaisala, roughly 75% of the order book is scheduled to be delivered in 2024, during recent years, the share has hovered around 75-80%. While the W&E’s profitability developed more favorably than we estimated, we expect higher project sales from Q2/24 onwards to mitigate larger short-term margin gains going forward. We continue to forecast revenue growth for the remainder of the FY driven by W&E’s strong backlog and IM’s softer comparison period, especially for H2. We have made only slight estimate adjustments as Q1 figures were largely in line with our estimates. We now estimate revenue of EUR 546m (prev. EUR 542m) and EBIT of EUR 70m (prev. EUR 68m), both slightly below the guidance middle.

BUY with a TP of EUR 40.0

Vaisala is currently priced at a roughly 5-20% discount when compared to peers on our 2024E estimates. In line with this, our DCF points towards a discount of roughly 10% to fair value. With only slight estimate changes, we keep our TP at EUR 40.0 with our rating at BUY.