Helma Eigenheimbau AG (DE:H5EG) H117 results confirmed the anticipated slowdown in the German residential market associated with longer project turnaround time in the construction planning and contracting stages. The company’s order intake showed some signs of moderation as it declined 3.6% y-o-y to €116.3m due to the already expected weaker order inflow in HELMA Wohnungsbau. However, management reiterated its recent guidance and forecasts a considerably higher order intake in H217 compared with H117. Helma’s current premium to peers of c 15% on FY17e P/E reverses to a 5% discount in FY18e based on consensus expectations of 27% EPS growth.
H117 results showing moderate growth
Helma posted 3.5% y-o-y growth in adjusted EBIT to €6.6m in H117, as the reported 6.9% sales growth was partially offset by higher operating costs, in particular the increase in materials and third-party services costs (+31.3% y-o-y, though driven by inventory build-up) and other operating expenses (+20.0% y-o-y). Taking into account a 10.0% y-o-y increase in D&A, this translated into an adjusted EBIT margin of 6.0% (H116: 6.2%). Management guides to FY17 adjusted EBIT of 7-8% (vs 8.4% in FY16).
More cautious outlook reiterated
Following the downward revision in sales guidance for FY17-19 announced by the company back in February 2017 (which triggered a 25% share price decline until the H117 results announcement date), management reiterated its more cautious expectations of group sales reaching €290-300m in FY17 and thus posting c 10-14% y-o-y growth. FY18 and FY19 targets were maintained at €325-340m and €370-400m, respectively. Also, Helma still expects y-o-y growth in new orders in FY17 to remain within the ±10% range and guides to a much stronger order inflow in H217 compared with H117.
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