YIT - CEE pipeline supports growth
YIT’s Q3 results overall corresponded to expectations but was positive in terms of profitability of the contracting segments. With slight upwards revisions to our estimates, we adjust our TP to EUR 3.0 (2.9) and retain our ACCUMULATE-rating.
No larger surprises on group level
YIT’s Q3 results as a whole brought little surprises. The net sales of EUR 402m (-11%y/y) were quite in line with expectations (Evli/cons. EUR 417.9m/403m), affected by a low number of consumer apartment completions. The adj. EBIT of EUR 12m slightly beat expectations (Evli/cons. EUR 10.3m/10.3m). The order book of EUR 2,929m was on par with the previous quarter. On segment level a positive was the profitability of the contracting segments, both showing around a one percentage point y/y increase in adj. EBIT margins. The specified guidance range for Group adj. EBIT (EUR 40-60m, prev. 30-60m) was unsurprising, with our and consensus estimates in the upper half of the new guidance ahead of Q3.
Contracting segment margins raised, large CEE potential
Following segment level revisions, our profitability estimates for the coming years are up slightly. We have assumed a more conservative stance for business premise construction in Finland based on market outlook and order book and shifted residential (investor apartments) demand recovery more towards 2027, thus slightly lowering our net sales estimates. On the other hand, we have raised our margin expectations for the contracting segments, leading to the slightly raised profitability estimates. YIT also raised the market environment outlook for infrastructure to good, but the order book development does not yet support faster than lower single-digit growth. The strongest upside potential still lies in Residential CEE, where YIT has initiated projects valued at near 450m, to be completed in 2026, with our estimate of EUR 406m reflecting uncertainty in timing of apartment sales.
ACCUMULATE-rating with a target price of 3.0 (2.9)
Based on our slight upward adjustment to our estimates, we adjust our target price to EUR 3.0 (2.9) and retain our ACCUMULATE-rating. Larger near-term upside would mainly rely on a successful exit from Tripla, which we have not emphasized in our valuation due to challenging exit conditions.