LapWall has signed contracts worth EUR 4 million during early fall at its Pyhäntä unit

Translation: Original comment published in Finnish on 9/21/2023 at 6:52 am EEST.

The press release does not put pressure on our estimates for the rest of the year’s order intake, revenue and adjusted EBIT. The weak cycle in the construction sector also keeps the risks associated with LapWall’s forecasts elevated especially looking to next year, although so far, the company has been able to reach a tolerable volume due to the relatively normal pull of the roof element segment driven by industrial and public construction.

LapWall has signed contracts worth EUR 4 million for the rest of the year at its Pyhäntä unit

LapWall announced yesterday that the company has signed contracts for the supply of wood elements worth some EUR 4 million at the Pyhäntä unit during early fall. Deliveries will take place during fall and late 2023. Individual projects are worth EUR 150,000, on average.

In addition to public and commercial construction, agreements have also been made for care facility, residential and regional construction projects. The sites include several schools and a community center. The agreements include single-layer wall elements, facade elements and roof element system products.

Thanks to the improved order book, LapWall’s Pyhäntä factory has moved to two full shifts on all lines. The number of employees in Pyhäntä’s production has increased by 15 people.

The order development does not put pressure on H2 estimates but next year remains uncertain

The drastic weakening of the housing construction cycle has in LapWall thus far hit only the Pyhäntä unit that focuses almost exclusively on wall elements The situation has for a long time been better for the Pälkäne and Veteli units that focus on roof elements, and we estimate that demand for roof elements driven by industry and public construction has remained fairly normal also in Q3. However, we feel the risks to good performance in these segments have increased due to, e.g., higher interest rates.

We expect LapWall’s order intake to be EUR 12.5 million in Q3. Thus, we believe that the EUR 4 million orders announced yesterday at the Pyhäntä unit are reasonably well in line with our Q3 order flow estimate, even though the timing of the orders announced yesterday is rather unclear. When the announced orders are combined with LapWall’s order backlog of EUR 23 million at the end of Q2 and the fast delivery time of new orders, we believe that the company is well on track to reach its EUR 40-45 million revenue guidance. We also feel that reaching our 2023 revenue estimate that is at the top of the guidance range is still realistic. As it seems that the revenue development for the rest of the year is at least in line with expectations, we also estimate that LapWall will achieve its adjusted EBIT guidance of EUR 4.0–4.5 million (our estimate is at the top of the range). However, the order book does not provide much visibility to next year, and due to the weak market situation in the construction sector, the estimate risks associated with LapWall remain high.