Tekova - Turning blueprints into bottom line
We initiate coverage of Tekova with a BUY rating and a target price (TP) of EUR 1.7. We estimate that Tekova will increase its profitability in 2026, when its announced self-developed projects are completed. The current valuation implies a significant decline in profitability, which we do not expect. In our view, Tekova can maintain a high level of profitability going forward.
Leader in profitability
Tekova is a Finnish construction contractor and real estate developer focused on commercial and industrial buildings. The company specializes in simple premises with repeatable technical design, using a turnkey operating model that covers both design and construction. This allows Tekova to leverage its own technical expertise and optimize its supply chain. This focused approach has resulted in best-in-class profitability, with a last twelve months (LTM) EBIT margin of 9.6% after Q3/2025, compared to the industry average of around 4%.
Next step in strategy underway
Tekova has achieved its high profitability primarily through contracting. As part of its current strategy, Tekova aims to increase the share of real estate development, seeking to capture both contracting and development profits. We estimate that approximately 20% of 2026 revenue will come from self-developed projects, which have the potential for higher margins. We anticipate some cost headwinds from subcontracting, as Tekova has benefited from favorable subcontracting prices during the recent construction downturn. This is likely to reverse as the industry recovers. In addition to the strong profitability outlook, we forecast modest volume growth, supported by the start of new regional unit and enhanced capability to manage larger projects.
BUY rating with TP of EUR 1.7
We initiate coverage of Tekova with a BUY rating and a target price of EUR 1.7. We believe the current valuation reflects decrease in earnings even though there are no signs of deterioration. Our target price is based on a P/E multiple of 8x, assuming stable EPS of EUR 0.22 and 0.21 for 2026 and 2027.