SRV - Project timing boosting Q4

Revenue guidance raised due to timing of revenue recognition
SRV raised its revenue guidance for 2025 on January 19th due to revenue recognition from on-going projects being more front loaded than anticipated during the remainder of the year and now expects revenue of EUR 700-715m (prev. 650-680m). The operative operating profit guidance was specified to EUR 6.0-7.5m (previously expected to be positive). The raised revenue guidance is in our view trivial, being related to project timing. The implied operative operating profit margin of around 1.5-2.2% for Q4 is positive given margins below 1% during Q1-Q3/25. We expect the improvement to be partly related to the increased volumes, but also to some extent due to operative performance.

Anticipating revenue decline in 2026
We have adjusted our estimates based on the guidance revision and accounted for the divestment of SRV Infra, completed at the end of 2025. The main revisions relate to lowered revenue estimates due to the aforementioned revenue timing and from the lost revenue through SRV Infra and the +EUR 20m EBIT impact from the divestment. We now expect revenue to decline by 1.4% in 2026. Given the order backlog development during 2025 as well as the shift of a larger share of revenue to Q4/25 and sold operations, expectations could arguably be tilted towards a larger revenue decline. From an investment case perspective, we assign little value on the revenue during 2026. Of much more importance is the order backlog development, which based on news during the end of 2025 is showing some promising signs for business construction.

REDUCE-rating with a TP of EUR 4.8
Following our estimates revisions, potential is pushed all the more towards 2027 and beyond. Market recovery or stronger signs thereof, especially in residential construction, will be crucial in 2026. We retain our TP of EUR 4.8 and REDUCE-rating.