Vaisala - Profitable growth ahead
Vaisala reports its Q3/24 results on Thursday 24th of October. We expect continued y/y growth driven by the softer comparison for IM while the solid backlog drives growth for W&E.
Market conditions remain relatively unchanged
The market environment was already weak during the third quarter of last year for IM. According to our understanding, the market environment has stayed relatively stable compared to H2/23 during the first nine months of the fiscal year. For W&E, Vaisala has secured several substantial project agreements over the past twelve months, including a EUR 25m project delivery in Indonesia added during the quarter (will be recognized in order book once the financing agreement has been confirmed). As the agreed projects extend over several years, growth is expected to materialize in the coming years. Furthermore, the company expanded its subscription-based services during the quarter by acquiring Speedwell Climate. Speedwell provides data and software to structure, price, and settle index-based climate risk transfer contracts. The acquisition is small in Vaisala’s scale yet provides an interesting opening in the insurance segment.
Growth should pick up in 2025E
We have made minor adjustments to our estimates. We now estimate net sales of EUR 562m and EBIT of EUR 77m for 2024E, at the upper end of the guidance range (net sales 540-570, EBIT EUR 68-78m). We still foresee growth for IM in the second half of the year, primarily due to the easier comparison period from last year. We anticipate that service sales will grow y/y in H2, though at a slower pace than in H1. In W&E, we predict that the robust order book will continue to drive net sales growth in H2. Across the group, we anticipate margins to remain fairly steady compared to last year. We have increased estimates for 2025E, primarily due to higher W&E growth projections. While we anticipate slow growth in mature W&E markets, we foresee stronger growth from projects and data business.
HOLD with a TP of EUR 47.0 (prev. EUR 46.0)
With the positive estimate adjustments, we increase our TP to EUR 47.0 (prev. EUR 46.0). Based on our estimates for 2024-25E, Vaisala is priced at 20-18x adj. EV/EBIT, in line with the peers.