Analysts and analyst reports

• Mika Karppinen, Danske Bank
• Atte Jortikka, Inderes

Kreate further strengthened its position in the Finnish infrastructure construction market by acquiring SRV’s Infra operations and adding also exposure to underground rock construction. The deal is quite decent sized, adding some 25% to group EBIT. EV of the deal indicates EV/EBIT multiple of 11.5x vs. Kreate’s own multiple 10.9x and the peer group’s multiple of 13.7x. Valuation is slightly above Kreate’s own multiples but on the other hand margins are also above Kreate. We believe that Kreate is able to find some synergies from the combination, supporting value generation in the coming years. Leverage of the company clearly increases (gearing to some 120%) but the more stable performance in the infrastructure construction market and quite good cash flow generation should quite rapidly lower indebtness. Slightly positive news.

Kreate announced to acquire SRV’s infrastructure construction operations, SRV Infra Oy. The EV of the deal totals EUR 30m, which will be paid in cash. Kreate will use its cash reserves and a new EUR 15m bank loan and also the revolving credit facilities are increased by EUR 5m. The operations had 106 employees. The completion of the transaction is subject to regulatory approvals. The parties expect the transaction to be completed by the end of 2025. The deal adds some 17% to Kreate’s sales and 25% to EBIT. We estimate that Kreate’s gearing will increase from around 58% level to around 120% after the deal.

SRV Infra Oy’s business consists mainly of underground rock construction and, to a smaller extent, foundation and special foundation construction. SRV Infra Oy’s revenue in 2024 was EUR 52.2m and its operating profit was EUR 2.6m (margin 5.0%) . In connection with the transaction, Kreate Oy and SRV Group Plc have entered into a long-term framework agreement concerning rock, foundation and concrete construction works related to building construction, as well as other infrastructure construction. The framework agreement covers all types of projects.

The acquisition complements Kreate’s offering well and the underground rock construction is a completely new construction area for Kreate in Finland.

Kreate and SRV announced on New Year’s Eve that they had completed the SRV Infra Oy transaction. The completion of the transaction by the end of 2025 was expected, as the competition authority had already approved it in late November. The acquired company will be consolidated into Kreate as of January 1, 2026. The news has no impact on our estimates, as we already included the acquisition for both companies in October when the deal was announced.

Transaction completed as planned
SRV and Kreate announced that the acquisition of SRV Infra Oy was completed on December 31, 2025, with an enterprise value of around 30 MEUR as previously announced. SRV Infra’s revenue in 2024 was 52 MEUR, and its EBIT was 2.6 MEUR. SRV Infra’s business will be reported as part of Kreate Group’s Finnish structural engineering business as of January 1, 2026. SRV will record a sales gain of over 20 MEUR from the transaction. The transaction has no impact on either company’s guidance for 2025.

Measured by 2024 earnings, the purchase price is neutral (EV/EBIT 11.5x) and in line with the valuation level we accept for the sector (EV/EBIT 10-12x). However, we believe the multiple will decrease for 2025 due to SRV Infra’s improved margin accumulation last year.

The transaction seems logical for both the seller and the buyer
For Kreate, the acquisition expands the company’s offering to underground rock engineering, which is a new area for the company in Finland. The acquisition also strengthens the company’s position in foundation and special foundation construction. The long-term framework agreement with SRV, concluded in connection with the transaction, also provides stability and visibility for the coming years, reducing the risks of the acquisition. In addition, the acquired business is remarkably profitable and supports Kreate’s profitable growth in our estimates for 2026.

With the transaction, SRV strengthens its balance sheet and frees up capital to enable its targeted project portfolio structure. The company’s strategy focuses on increasing self-developed and -based housing and commercial construction, as well as strengthening building construction contracting. However, the transaction separates a unit whose earnings performance has been good in recent years from the Group. In our view, the transaction reduces the share’s risk level, considering the convertible bond maturing next summer.

Due to the limited overlap between the businesses, we expected the transaction to close as planned at the end of 2025. We therefore included the impact of the acquisition in our estimates already in October, and the news does not affect our estimates for either company.

Q3 2025: Starting to grow (22 Oct 2025)

The improved market conditions and order backlog clearly accelerated Kreate’s sales growth in Q3, giving good support to margins and offsetting negative impacts from earlier investments. Tendering activity in infrastructure construction remains robust and order inflow is set to improve in coming quarters., which should also give margin improvements. Share remains at wide discount to peers. Our fair value range is EUR10.1-11.5 (10.0-11.4).

• Volume leverage supporting margins. Kreate’s Q3 earnings were slightly better than LSEG consensus expectations, driven by the accelerated sales growth (22% y/y in Q3 vs. +4%in H1), and this offset the impact of earlier investments which had diluted margins in H1. Improved volumes are key to margin improvement, going forward, we believe.

• High tendering activity. Kreate’s order book slightly weakened in Q3 compared to Q2 (EUR242.4m in Q3 vs. EUR281m in Q2 25 and EUR153m a year ago ). However, we believe the fluctuation simply arises from the timing of sizeable order bookings. The company has already won projects worth over EUR300m that have not been included on the order book yet (still in the development phase), which we expect to start supporting the order book in the coming quarters. Management is still positive about the longer-term market outlook, driven by industrial, railway, green transition, and safety- and security-related projects. In the short term, one large potential trigger for the shares could be a possible sales guidance upgrade, in our view. Keeping in mind that Q1-Q3 25 sales totalled EUR220.7m and the already signed order backlog for Q4 totals some EUR87m, we believe it is highly likely that
Kreate can even slightly exceed its sales guidance for full-year 2025

• Estimate changes. We have raised our EBITA estimates for 2025-27 by 4% 1% and 1% respectively.

• Valuation. The share is trading at EV/EBITA for 2026E of 8.9x, an 18% discount to the peer group. Despite the recent increase in the share price, the valuation discount to the peer group remains elevated compared to history.

Read the analyst reports:

• Q3 2025 analysis (22 October 2025)
• Q2 2025 analysis (15 July 2025)
• Q1 2025 analysis (24 April 2025)
• Q4 2024 analysis (5 February 2025)
• Q3 2024 analysis (25 October 2024)
• Q2 2024 analysis (16 July 2024)
• Q1 2024 analysis  (26 April 2024)

Kreate Q3’25: Projects are progressing, sizes are growing

Kreate’s revenue growth clearly exceeded our estimates in Q3. Due to strong volume development, profitability was also higher than our estimates in absolute terms, although relative profitability was slightly below our estimates. After a strong quarter, the current year’s revenue guidance appears cautious, which may be explained by the relatively slower revenue recognition of larger projects than before. Earnings growth and dividend yield in the coming years support the expected return, but the valuation is tight based on our current year estimates. We raise Kreate’s target price to EUR 10.5 (was EUR 9.4) but reiterate our Reduce recommendation.

Volume development drove the earnings beat
Kreate’s Q3 revenue grew by 22% year-on-year to 94.7 MEUR, exceeding our 84.7 MEUR estimate by 12%. By business line, revenue in Structural engineering grew particularly strongly by 29% to 63.7 MEUR. In Transport infrastructure, revenue also grew by 10% to 29.9 MEUR. By country, growth in Sweden was clearly stronger than our forecasts, with revenue increasing by 54%.

Due to the strong growth, profitability was also at a higher level than we expected, with the absolute adjusted EBITA rising to 4.0 MEUR, topping our forecast of 3.6 MEUR. The EBITA margin was 4.2%, which was almost in line with our forecast of 4.3%. Despite stronger revenue development than our forecasts, profitability was still hampered during the quarter by the company’s front-loaded growth investments in personnel. In the lower lines, financing expenses were lower than our estimates, and thus EPS also grew to EUR 0.30, exceeding our estimate of EUR 0.24.

The company’s order book decreased slightly from the previous quarter, ending at 242 MEUR at the end of the quarter. Compared to the prior-year period, the order book at the end of the quarter grew by as much as 58%. In addition, the company has several major projects won and/or in the development phase that have not yet been recorded in the quarter’s order book.

Our revenue forecast is in line with the upper end of the guidance range
Kreate reiterated its guidance in connection with the Q3 report, in which the company estimates its revenue for the current year to be 290-310 MEUR (2024: 275.5 MEUR) and EBITA to be 9-11 MEUR (2024: 8.8 MEUR). After January-September, revenue stands at 220.7 MEUR and EBITA is 6.3 MEUR. Kreate estimates that 87 MEUR of the order book at the end of Q3 will be recognized during the 2025 financial year. Thus, with only the project portfolio recognized from the order book, the company would end up near the upper end of the revenue guidance range. We now forecast the company’s revenue to grow by 12% this year to 310 MEUR and EBITA to rise to 10 MEUR (EBITA%: 3.3%). Our updated revenue forecast is in line with the upper end of the company’s guidance range. Profitability will be supported by continued growth in volumes in the remainder of the year and an increase in the relative share of the more profitable Swedish business. On the other hand, the company’s front-loaded investments in personnel are still reflected in our forecasts in personnel costs.

Overall valuation picture neutral
Kreate’s share is valued at 12x EV/EBIT and 15x P/E multiples based on our current year estimates. Relative to our acceptable valuation (EV/EBIT & P/E: 10-12x), the pricing appears challenging. On the other hand, for the coming years, the multiples fall to a more attractive level (2026-27e EV/EBIT: 9x, P/E: 11x). However, in our view, this does not offer sufficient upside to make the expected return attractive, as some of the potential has evaporated with the share price increase. In addition, there is uncertainty regarding the realization of earnings growth, especially as the average project size increases. The DCF model value is also well in line.

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.