Kempower Q1'26: Growth outlook largely unchanged

Translation: Original published in Finnish on 4/29/2026 at 7:32 pm EEST.

Kempower's Q1 report fell short of our expectations, as the gross margin, a key metric for long-term profitability development, remained weak due to factors such as the geographical distribution of sales and persistent tight pricing. However, the delivery time for new orders decreased, which is why we slightly revised our growth assumption upwards. However, due to lower margin forecasts, changes in earnings estimates turned negative, especially for 2026. Broadly, we still see competitiveness as strong, with the company gaining market share in Europe and North America. We reiterate our EUR 15 target price but lower our recommendation to Reduce (was Accumulate) as the share price increase has significantly raised the bar for earnings growth.

Order growth was acceptable, but the margin level was disappointing

Kempower's Q4 revenue grew significantly stronger than we expected, which we interpreted as being due to accelerated delivery times. Although new orders were below our expectations, they were at a fairly decent level in the seasonally slower Q1. The gross margin, on the other hand, remained at the previous quarter's subdued level, which, together with increased operating expenses, pushed actualized earnings below our forecast. Adjusted EBIT was -3.7 MEUR, while our forecast was -1.8 MEUR.

Growth guidance is moderate compared to order development

The company guides for 10–30% revenue growth and a significant improvement in adjusted EBIT for 2026. Although the order book did not grow from the turn of the year, this was explained by the faster delivery schedule. Approximately 75% of the order book, or ~100 MEUR, is expected to be delivered during 2026 (Q4’25 ~66%), which should support revenue development.

We now forecast 26% revenue growth for 2026, but a lower earnings level than before due to reduced margin forecasts. Our medium-term (2028) EBIT estimate, on the other hand, decreased significantly more moderately, as our assessment of the company's potential remains largely unchanged.

Gaining market share has been reflected in the margin level

We estimate that the weakening gross margin reflects Kempower's more aggressive growth strategy, through which it aims to increase market share in Europe outside the Nordics and challenge Alpitronic, which has achieved an estimated three times larger market share in Europe compared to Kempower. Kempower has clearly gained market share over the past year, while demand in the Nordic countries has slowed as the passenger car charging network approaches maturity. We believe it is possible that pricing can be improved in the future as new customers become established clients of the company. The company also launched a production cost efficiency program last year aimed at lowering unit costs and thus improving the sales margin. The effects of the program are expected to be visible during 2026.

Valuation has turned neutral

Kempower operates in a rapidly growing market, and we believe the company's competitiveness is strong, even though market share growth has necessitated compromises in margins. Therefore, we believe the company's valuation should be assessed based on earnings forecasts that consider its longer-term potential. The utilization rates of the company's factories are still relatively low in 2025-2026, but in 2027-2028, earnings-based valuation multiples (EV/EBIT) are already falling to neutral levels (25x and 14x) compared to our estimated fair value range of 15-20x. In light of this, we believe the expected return remains insufficient, as the share price is already pricing in the company's journey to become one of the industry's major global players too prematurely. We expect the Capital Markets Day in Q2 to provide more visibility into the company's medium-term earnings growth prospects.