SRV - Stays on the defensive
SRV’s Q4/24 figures largely matched our expectations, yet the 2025 outlook left much to be desired. We were hoping to see a spark of offense, but it seems 2025 is shaping up to be another year of playing full defense for the company as especially the residential market continues to be on a standstill.
Figures broadly in line, while orders slightly below expectations
Revenue for Q4 was EUR 209.1 million, compared to EUR 181.8 million in Q4/23, slightly surpassing our estimate of EUR 196.0 million. This represents a y/y growth of 15% which was solely led by non-residential construction as was expected. The operational operating profit for Q4 was EUR 3.0 million, matching our estimate and up from EUR 2.4 million in Q4/23. The order backlog for Q4 remained consistent with the previous year at EUR 1052.8 million, compared to EUR 1048.6 million in Q4/23. However, SRV's new agreements totaled EUR 66.0 million, falling short of EUR 253.1 million for Q4/23.
Third time the charm for a H2 market rebound?
SRV’s outlook was weaker than we had expected for 2025. SRV now expects FY 2025E net sales to amount to EUR 630-710m and operative EBIT to be positive. We have revised our estimates, and we now estimate net sales of EUR 707m for 2025 with operative EBIT of EUR 7.8m. We model net sales decline for non-residential construction while previously we estimated growth of 5% y/y. Our non-residential net sales forecast is driven by the backlog where the development was weaker than expected in Q4. Number of apartments under construction at the end of Q4 grew both q/q and y/y yet were still at relatively low levels and comprised solely of contracting. As a positive, SRV released that it is starting the construction of a developer-contracted project in Espoo, this marks the first developer-contracted project start since 2022. In addition to the Espoo project, the company has one project in pre-marketing in Tampere. We expect further developer-contracted starts in H1/25 that could be recognized as income during 2026. While residential pick-up is evident in the coming years, we see the company’s long-term targets increasingly challenging to reach.
REDUCE (ACCUMULATE) with a TP of EUR 4.8 (EUR 5.2)
We revise our TP to EUR 4.8 and recommendation to REDUCE. While we continue to see the long-term upside high, the market turn seems to take its time. We expected 2025 to be challenging for the company due to sales mix, yet the outlook was still a letdown. Based on our revised estimates, the pricing appears elevated for 2025E, whereas it is relatively neutral for 2026E.