Administer - Steadily towards growth
Administer reports Q2 on August 14. We expect net sales and profitability to remain broadly flat y/y, with market conditions still difficult and no contribution yet from the pending Sarastia acquisition, which is awaiting regulatory approval.
Q2 expected to track previous year
With the recently announced Sarastia acquisition still pending approval and not yet reflected in Q2 figures, and market conditions still subdued, we expect net sales and EBITDA to remain in line with Q2’24. We see limited room for further margin gains without topline improvement, as the cost structure is to our understanding largely optimized. The Sarastia acquisition, if completed, would significantly lift Administer’s 2026 net sales above its EUR 100m target, though margin pressure may extend the timeline to reaching the 15% EBITDA margin goal. The company has noted it will update its 2025 guidance upon completion of the transaction, at which point we will also revisit our estimates.
Largest acquisition to date with significant growth potential
In June, Administer announced plans to acquire the financial, payroll and software services business serving Sarastia’s (Numera Palvelut Oy) municipal clients. The agreement was signed on 30 June following Numera’s AGM, and competition authority approval is expected in early autumn. The business to be acquired generates around EUR 35m in annual revenue, employs 350 people, and serves over 100 municipalities. The deal supports Administer’s strategic goal of expanding its public sector exposure and offers meaningful long-term potential. We look forward to management’s view on the path and timeline to profitability for the acquired operations, given their recent margin pressure. We also note potential challenges related to retaining municipal clients within the acquired operations, as changes to procurement law may increase competitive pressure at contract renewal stages.
BUY with target price of EUR 2.9
The upside potential of the acquisition is considerable. For reference, assuming a more conservative potential EBITDA margin range of 4-8% and applying Administer’s current multiples would put the equity value at EUR 10-20m compared with the EUR 5m acquisition price. With the acquisition yet to be completed and uncertainty around legislation and profit margins remaining, we for now assume a neutral stance regarding valuation. We retain our TP of EUR 2.9 and keep our BUY rating.