Consti: Yet to gain momentum

Consti: Yet to gain momentum - Evli

Consti’s Q2/2025 figures are due on Friday, July 18. We expect slight sales decline y/y while mix should retain margins at a satisfactory level despite the intense competition. Market conditions continue to be soft, with recovery progressing slowly.

Backlog should stay at a healthy level

Consti’s order backlog at the end of Q1 was at EUR 246.4m, up 0.8% y/y while order intake grew 65.5% y/y. The order intake was positively driven by increased orders in the Housing Companies and Corporations business areas. The company announced a EUR 30 million school renovation and expansion project during the second quarter. The market has remained quiet, and the Finnish renovation trend indicator kept declining during Q1/25. Despite the slowness, a survey by the Finnish Association of HVAC Technical Contractors conducted at the start of the year indicates that market sentiment in renovation construction has continued to improve.

Forecasting slight acceleration in H2

While we model slight sales decline for Q2, we continue to expect sales growth for the full year. The overall Finnish renovation market volumes are expected to grow slightly this year. In addition, a larger share of end of Q1/25 backlog will be recognized during the year compared to last year. We also expect that the company’s order backlog stayed at a healthy level at the end of Q2/25. Despite the forecast for FY sales growth, we estimate margins to only match those of last year for the full year as we expect the competitive environment in renovation to remain tight. On the other hand, we see the relatively strong backlog in the Housing Companies business area supporting the sales mix. We also expect the headwinds impacting the service business to ease compared to what was observed in Q1. Given the continued sluggishness in market recovery and the likelihood of continued elevated competition, we have lowered our estimates for the coming years as well.

BUY with a TP of EUR 12.0 (prev. EUR 12.5)

After the slight negative adjustments, we lower our TP to EUR 12.0 while retaining rating at BUY. Consti is priced at 8-7x EV/EBIT on our estimates for 2025-2026E. Although significant earnings growth remains difficult to achieve in the near term, the valuation discount compared to peers continues to be larger than warranted especially considering the company’s resilient performance in a sluggish market.

Consti: Yet to gain momentum - Evli

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Consti: Yet to gain momentum - Evli

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