Expecting margin improvement and minor growth
Consti expects an operating profit of EUR 7-11m in 2021, with our estimate unchanged at EUR 9.1m. Activity is seen to increase slightly y/y in 2021 and our net sales estimate is up some 3% to 281m, expecting minor growth of 2.3%. COVID-19 induced uncertainty is still at elevated levels, thus also the wider guidance range. Consti updated its strategy for 2021-2023, with clear focus on the customer focused organization. Perhaps most unexpected was the ambition to expand operations to new construction projects. This approach however appears to be more of a complementary offering to serve existing customers and the share of new construction projects could be seen to be some 10-15% of net sales at the end of the strategy period. In our view Consti now appears to be seeking to take more initiative after having focused on organizational changes and profitability improvement.
BUY with a target price of EUR 13.0 (12.0)
Consti’s valuation has continued to approach that of peers but is still not too stretched and with the good development and solid cash generation we see continued upside potential. We adjust our target price to EUR 13.0 (12.0), valuing Consti at 8.8x 2021 EV/EBITDA, our BUY-rating remains intact.
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