SRV - All eyes on demand development
SRV’s Q4 results came in quite as expected. We expect slow but steady progress in 2026, with all eyes on pick up in demand for residential construction, which is key for larger earnings improvements in 2027.
Q4 results in line with expectations
SRV’s Q4 results were in line with our expectations. Revenue amounted to EUR 215.8m (Evli EUR 216.7m) and operative operating profit to EUR 3.6m (Evli 3.9m). With an order intake of EUR 109.3m the order backlog fell to EUR 772.3m (EUR 1,053m in Q4/24), with the decline also partially due to the sale of SRV Infra. Revenue in 2026 is expected to amount to EUR 650m-750m (2025: EUR 705.6m) and the operative EBIT is expected to be positive (2025: EUR 6.8m).
Modest expectations for 2026, eyeing pick up in 2027
Following some minor adjustments to our estimates, we now expect revenue of EUR 697.9m and an operative operating profit of EUR 7.3m, with the latter down slightly due to perceived limited prospects of margin improvements on expected volumes and revenue mix. Adjusting for SRV Infra’s sales to external customers in the comparison period, our estimate corresponds to low single-digit growth. We anticipate a growth of ~20% in housing construction from the very low comparison period, aided by a limited number of developer-contracted housing unit completions. Potential, future margin development relies heavily on increased housing construction, and especially self-developed units. The trend has been positive, and we continue to anticipate significant growth in 2027. However, the market sentiment still remains cautious, and we see a moderately high risk of the more notable earnings improvements being pushed towards 2028, should housing unit start-ups not increase during H1/26. The outlook for business construction remains healthy in our view, supported by orders won but not yet included in the backlog.
REDUCE with a target price of EUR 4.8
We retain our REDUCE-rating and target price of EUR 4.8. Although multiples start to appear more attractive on 2027 estimates, should the housing construction market gain traction, the visibility is still to limited to emphasize said multiples.