Canatu H2'24 preview: Exploring growth outlook

Translation: Original published in Finnish on 3/24/2025 at 7:33 am EET.

Canatu will report its 2024 financial statements for the first time as a listed company on Friday at 9.00 am EET. The company reports strong growth figures for 2024, in line with the guidance given in connection with the SPAC listing last fall. With increased investments in growth, we expect profitability to be down from the previous year and the result to be negative. Our attention in the report is particularly focused on the company's outlook, which should support continued strong growth, which is also required by the high valuation of the stock (2024e EV/S 15x-17x).

Strong revenue growth in 2024

Canatu's guidance is that 2024 revenue will be 20-25 MEUR, and its reported revenue for H1 was 11.1 MEUR. Otherwise, no half-year figures have been published for 2023-2024. Our forecast expects full-year revenue to be in the middle of the guidance range at 22.7 MEUR, which would represent an increase of 67% year-on-year (consensus 22.4 MEUR). In our forecast, the semiconductor industry will grow by 76% to 19.6 MEUR and the automotive industry by 25% to 3.1 MEUR. Canatu has communicated that a significant part of the growth in 2024 will come from the delivery of the first two reactors to customers in the semiconductor industry. In an interview with us in January, the company's CEO commented that the reactor deliveries had gone well and were even slightly ahead of schedule.

Increased growth investments and IPO weigh on our profitability forecast

Despite the strong growth, we expect Canatu’s result to have decreases from the previous year and adjusted EBIT to have been -3.4 MEUR (2023: -0.6 MEUR). The consensus forecast expects an EBIT of -1.7 MEUR. In 2024, the company continued strong recruitment and other investments, and with the SPAC listing, the company had to also bear certain costs previously attributable to Lifeline SPAC I and other new costs arising from the listing. We also expect other operating income (EUR 2024e 0.5 MEUR) to have shrunk clearly from 2023 (2.9 MEUR), when the loan received from Business Finland turned into a grant.

We have included -0.75 MEUR in non-recurring transaction costs from the listing in the 2024 financing costs. Overall, we forecast reported earnings per share to have fallen to EUR 0.12 below zero. While dividends are not expected from Canatu at this stage, there is a lot of capital being invested to achieve strong growth.

Looking for support from outlook for continued strong growth

In the financial report, we pay particular attention to Canatu's outlook, as the company's valuation is heavily based on strong growth expectations for the coming years. Growth expectations are particularly focused on 2027, when the company aims to achieve a revenue of more than 100 MEUR and an adjusted EBIT margin of more than 30%. We believe the key to growth will be the ramp-up of the reactor business, which will lead to growth in recurring revenues from royalties and non-discretionary consumables in the years ahead. There is still very little visibility on this and any comments on the development of this business will be of interest in the report.

To reach its targets, the company needs to continue to grow this year, and we expect an increase in revenue of 34% to 30.3 MEUR in 2025 (4 analysts' consensus estimate 35.2 MEUR). We expect Canatu to continue its strong growth investments and, with the increase in the cost structure, EBITDA (0.0 MEUR) and adjusted EBIT (-2.4 MEUR) to remain at modest levels. The consensus expectation already foresees a better earnings development (EBITDA 3.55 MEUR), which is also possible with the combination of strong growth and high gross margin (2023: 71%; 2025e: 70%).