YIT - Let’s wait and CEE
We initiate coverage of YIT with a REDUCE-rating and TP of EUR 3.0. We forecast strong earnings growth for the coming years led by profitable growth in CEE, while Residential Finland should contribute more meaningfully starting from 2027E. The medium-term valuation looks relatively neutral, provided that the turnaround continues according to our estimates.
A Finnish construction market leader
YIT is a leading urban developer and construction company in Finland, Baltics and selected Central Eastern European countries. Its core business is to develop, build, and maintain sustainable living environments—mainly in cities and growth centers. YIT was founded in 1912 and listed in 1995 on the Helsinki stock exchange. The company employs currently some 4,100 employees across the operating regions. It has four different operating segments with different business models. The residential segments (Finland and CEE) focus on residential development while Building Construction and Infrastructure segments are traditional contracting segments.
Expecting earnings growth led by CEE, Finland recovery lags
With low number of residential completions expected for 2025E, the residential net sales will still fall compared to last year. We forecast that especially the Q3 will remain soft as YIT expects all completions in H2/25 to materialize in Q4. Going forward, we expect strong starts in Residential CEE in 2025 to drive completion volumes in 2026 which supports the segments volumes and profitability. For Residential Finland, the market remains largely in stand-by mode, and we forecast more material pick-up in pace starting from 2027E. In contracting, we expect slow and steady delivery for the coming years while we forecast some margin improvement especially for the Building Construction segment from further self-help. With higher volumes, improving sales mix and ongoing self-help in contracting, we estimate rapid earnings growth during 2025-2027E.
REDUCE with a TP of EUR 3.0
We initiate coverage of YIT with a TP of EUR 3.0 and rating at REDUCE. We view the company’s current valuation as rather neutral, assuming it carries out the turnaround in line with our expectations. The near-term valuation remains demanding on both absolute and relative terms. YIT is priced at 15-10x EV/EBIT based on our estimates for 2026-2027E. Our TP values YIT at avg. EV/EBIT of 12x for 2026-2027E which we see as a neutral level.