Analysts and analyst reports

Analysts with coverage on Kreate

• Mika Karppinen, Danske Bank
• Olli Koponen, Inderes

Danske Bank’s analyst reports

After Q1 2025 (24 April 2025): Order backlog showing positive signs

Kreate’s Q1 earnings were largely in line with expectations in the seasonally low quarter. A bright spot in the report was the continued improvement in the order backlog, supported by the gradually improving market outlook and success in tendering operations. It could still take some time before the projects are fully visible in earnings, but visibility has clearly started to improve, in our view. Further volumes should enable an improvement in margins as well. We expect a clear improvement in activity from H2 25. The share is valued at awide discount to peers. We reiterate our fair value range of EUR 8.0-9.4.

Impact on the investment case. Kreate’s Q1 earnings were largely in line with estimates in the seasonally low quarter. The low order book at the beginning of the quarter continued to dilute the volume development but the flexible cost base on the other hand supported earnings against weaker volumes. It also seems that the company’s projects are now in a better shape than a couple of years ago, limiting earnings fluctuation. Improved volumes are key to improving margins going forward, we believe.

Order book improving. A key positive item in Kreate’s Q1 report was the continued clear improvement in the order book, increasing to EUR226m in Q1 from EUR177m in Q4 24 and EUR184m a year ago. The improvement was quite broad-based, arising from railway, bridge and Swedish operations. The order book does not yet fully include the announced major wins of certain railway-related projects (Tampere & Vantaa, in total some EUR260m+), which should further strengthen sales volume visibility in the coming quarters. Management was very optimistic about the longer-term market outlook, driven by the railway projects, the green transition and safety- and security-related projects. Some of the bigger projects could move to the execution phase in H2 25, gradually starting to turn the volume development upwards, and offering a good earnings leverage.

Estimate changes. No major changes in our operating earnings estimates.
Valuation. Kreate is trading at EV/EBITA for 2025E of 9x, a 41% discount to the peer group

Read the analyst reports:

Post Q1 2025 (24 April 2025)
Post Q4 2024 (5 February 2025)
Post Q3 2024 (25 October 2024)
Post Q2 2024 (16 July 2024)
Post Q1 2024 (26 April 2024)

Inderes’s analyst reports

25 April 2025: Growth in the cards for the rest of the year

Kreate’s revenue decreased in Q1 in line with our expectations, with earnings down year-on-year. In our view, the first half of the year will be weak, and growth will be weighted towards the end of the year, reflecting the typical seasonality of the industry. In Kreate’s case, projects in the development phase are seen to increase the order book during the early part of the year, which provides good potential for growth as the market recovers. We believe that the valuation of the share is moderate relative to earnings growth in the coming years, and the expected return is supported by a strong dividend yield. After updating our fair value calculation and with our confidence in the positive drivers of the business strengthened, we raise the target price to EUR 8.6 (was EUR 8.0) and reiterate our Accumulate recommendation.

Revenue declined as expected, with earnings slightly down year-on-year

In Q1, Kreate’s revenue decreased by 3.7% to around 52.4 MEUR, which was virtually in line with our forecasts (forecast: 52.7 MEUR). The decline in revenue slowed down in the first quarter as comparison periods eased for Structural engineering (Q1 revenue: -14% y/y), Sweden grew strongly (+15% y/y), and railway projects brought growth in Transport infrastructure (+27% y/y). On the positive side, Kreate’s order book grew in Q1 by about 23% to 226 MEUR. The development of the order book supports this year’s developments well, and we also estimate it will strengthen in the coming quarters as the railway projects in the development phase enter the work phase.

In Q1, the company’s earnings decreased from the comparison period to 0.1 MEUR and were slightly below our forecast (forecast 0.3 MEUR). The EBITA margin was thus 0.1%, while we had expected a margin of 0.6%. In our view, profitability was hurt during the quarter by the low volume level and the still tight competitive situation, which in our view is reflected in price competition. At the bottom of the P&L, financing costs were slightly lower than we had expected, so earnings per share increased to EUR 0.01 (Q1’24: EUR -0.06), also exceeding our forecast of EUR -0.04.

Reiterated guidance indicates growth for the end of the year

In its guidance, Kreate expects its revenue to grow in 2025 to 290-310 MEUR (2024: 275.5 MEUR). EBITA is expected to grow to 9-11 MEUR (2024: 8.8 MEUR). Our current and near-term forecasts remain unchanged, with only minor fine-tuning, and we expect Kreate’s revenue to increase by 7% to 295 MEUR in 2025 and adjusted EBITA to increase to 9.9 MEUR (EBITA-%: 3.4%).

Revenue growth will be driven by railway projects coming into the order book in the spring, which we expect to significantly boost growth in the second half of the year. Profitability will be supported by growing revenue volumes and easing cost pressures. We also see the strengthening order book and the recovering market this year leading the company to earnings growth in the coming years (2024-2027 EPS CAGR: 16%). We see the prolongation of project development phases, the postponement of projects, project-related risks, or the continuation of a weak market outlook further into the fall as risks.

Moderate upside in valuation

In our view, Kreate’s valuation looks attractive over the next few years (2025-2026e: EV/EBIT 9x, P/E 10x), especially in the current year, given the company’s earnings growth and the opportunities created by the market turnaround. This will also bring Kreate’s profitability closer to the normalized 4% level. Relying on our 2025-2026 forecasts and acceptable valuation(EV/EBIT: 10-12x, P/E: 10-12x), we believe the stock has moderate upside. In addition, the dividend yield of around 7% generated by the strong cash flow increases the expected return. The DCF calculation is also well in line with our target price (EUR 8.6), supporting our recommendation.

Read the whole analysis:

Company analysis Q1 2025 by Inderes (25 April 2025)
Company analysis Q4 2024 by Inderes (6 February 2025)
Company analysis Q3 2024 by Inderes (28 October 2024)
Extensive report on Kreate by Inderes (1 October 2024)
Company analysis Q2 2024 by Inderes (17 July 2024)
Company analysis Q1 2024 by Inderes (29 April 2024)
Company analysis Q4 2023 by Inderes (1 Feb 2024)
Extensive report on Kreate by Inderes (28 Nov 2023)

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.