SRV - Momentum remains soft
SRV reports its Q2 figures on 8th of August. We continue to expect volume decline for the quarter, alongside modest profitability.
Finnish residential market remains largely in standstill
There has been no drastic pick-up in the Finnish residential new construction volumes during the first half of the year. At the end of May, the Finnish residential starts (LTM) were roughly in line with the last year’s levels. While the new construction supply has not picked up, the number of residential apartment transactions has grown notably compared to last year during H1, driven by existing home sales. At the same time, some 20% more housing loans have been drawn compared to last year. The Confederation of Finnish Construction Industries RT (CFCI) estimates 20 000 (of which 13 500 block of flats) residential building starts in 2025. We expect that the actual figures will be slightly lower, based on the current data for residential starts.
Earnings to remain modest
SRV’s order backlog has stayed relatively level since late 2023. At the end of Q1/25, order backlog was at roughly EUR 1b. In addition to the backlog, the company had some EUR 600m of project already won or tied to pre-development agreement that were not recorded in backlog yet. We estimate that the company’s backlog has remained at a healthy level, consisting mainly of co-operative non-residential contracting. SRV launched a developer-contracted housing project for the first time since 2022 in Q1/25. In addition, SRV has currently four developer-contracted projects in pre-marketing with completion dates in late 2026/early 2027 if commenced. We expect more developer-contracting project starts during the second half of the year and early 2026. We have revised our estimates downwards for residential developer contracting for 2026 as there has been slightly less starts than expected during the first half of the year.
REDUCE with a TP of EUR 5.0
SRV is trading at a premium compared to the Nordic construction company peer group based on our estimates for 2025-2026E. After our latest update, the peer group multiples have increased some 5% for the coming years. With higher peer group multiples, yet slightly revised estimates, we retain our TP at EUR 5.0 and rating at REDUCE.