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Analysts with coverage on Kreate

  • Mika Karppinen, Danske Bank
  • Olli Koponen, Inderes

Danske Bank's analysis 24 Apr 2025 Inderes' analysis 25 Apr 2025 Inderes' extensive analysis 1 Oct 2024

Danske Bank’s analyst reports

Ahead of Q2 25 results due 15 July: Expecting clearly improving order flow in H2

Weakened markets and order book have diluted Kreate’s delivery in recent quarters. However, the volume trend should be gradually turning upwards driven by the sizeable infra projects in tendering. We expect the order flow to clearly improve during H2, supporting the volume outlook for the coming years. Valuation discount to peers is sizeable. We have a fair value range of EUR8.0-9.4 for the share.

Expectations on improving market outlook gradually starting to materialize. The Finnish infra market conditions have been a bit sluggish in recent years and thereby the weakened Kreate’s order book has also diluted the company sales and earnings development in recent quarters. However, Kreate has already won two major railway projects and according to our understanding there are several quite sizeable projects in the tendering phase, which should result in a clearly improved order flow in H2, supporting the volume outlook for the coming years. The improving volumes should give further leverage to the margins in the coming years, we expect.

Q2 expectations. We expect Kreate to return back to growth path in Q2 driven by the recently started new projects. We forecast Q2 revenue growth of 7% y/y with EBITA margin of 3.7% versus previous year’s 3.9%. We expect the earnings recognition to have remained at the cautious level in the recently started bigger projects, slightly diluting EBITA-margin compared to the previous year. Our Q2 estimates are slightly above LSEG Data & Analytics consensus.

Valuation. Kreate trades at 2025E EV/EBITA of 9x, a 40% discount compared to the peer group.

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Inderes’s analyst reports

Q2’25 preview: We’re looking for building blocks for improved H2 earnings in the report

Kreate will publish its Q2 report on Tuesday, July 15. We expect revenue to have seen a slight increase in Q2, driven by a stronger order book, but earnings to have remained sluggish, weighed down by low volumes and fierce competition. While the operating environment remains challenging, the addition of rail projects to the order book toward the end of the year, coupled with easing cost pressures, will foster gradual improvement in performance.

Order book supports moderate revenue growth
We expect Kreate’s revenue to have seen a slight increase in Q2, rising by approximately 1.6% from the comparison period to 69.1 MEUR. According to our estimates, revenue growth is driven by the company’s stronger order book (Q1’25: +23%), while volume levels have remained subdued in our view. In the Finnish businesses, we forecast that revenue will continue to decline slightly (Q2’25e: -2 %), as the company has completed several larger projects and new more sizable projects are awaiting final decisions or the completion of the development phase. Conversely, for the much smaller Swedish business (2024: ~12% of revenue), we forecast strong revenue growth of over 30%, supported by the company’s previous growth investments and market growth.

Profitability remains low
We forecast adjusted EBITA for Q2 to be around 2.4 MEUR (Q2’24: 2.6 MEUR), corresponding to a margin of 3.5% (Q2’24: 3.8%). Consequently, we expect the company’s profitability to remain sluggish, hindered in our view by low volume levels and continued fierce competition in the form of price competition within the sector. While it would be desirable for the market challenges to ease over the next few years, the key for Kreate is that the projects progress successfully. We therefore look forward to receiving comments from the company on the impact of the challenging market situation in the construction sector on the competitive landscape and bidding activities in infrastructure construction, especially. However, Kreate is empowered to some extent by its special expertise in technically demanding projects.

Guidance anticipates growth weighted towards the end of the year
In its guidance, Kreate estimates its revenue for the current year at 290-310 MEUR (2024: 275.5 MEUR) and EBITA at 9–11 MEUR (2024: 8.8 MEUR). We project that Kreate’s revenue in 2025 will increase by 7% to 295 MEUR and adjusted EBITA to 9.9 MEUR, corresponding to a margin of 3.4%. To meet its guidance, we estimate that Kreate needs a strong H2, where growth is underpinned by the rail projects to be added to the order book and profitability, in turn, is supported by rising revenue volumes and easing cost pressures.

The Swedish market continues to look favorable for Kreate, and during the quarter, the company secured the largest project in the business’ history (~13 MEUR). Although the project is not significant on a group scale (order book Q1’25: 226 MEUR), we consider it proof of successful growth efforts. On the other hand, the market situation in Finland remains challenging and competition in infrastructure is fierce. Additionally, the short-term outlook is clouded by trade-political uncertainty, which may increase caution in developers’ investment decisions and disrupt supply chains. However, profitability lies at the heart of Kreate’s investment story, and we believe that its potential is clearly higher than what is currently evident. Nevertheless, to achieve this, the company requires a stronger volume base and successful project deliveries, as well as an easing of price competition.

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The analyses produced by the aforementioned analysts are independent and impartial views of those following Kreate. Kreate is not responsible for the veracity, completeness or use of the information by anyone. The information does not represent the views, forecasts or estimates of Kreate or its management and is not intended to be investment advice. Kreate is in no way responsible for your use of the content provided on the site.