NYAB Q1'25: Good start to the year

NYAB delivered stronger-than-expected revenue in Q1, while profitability was broadly in line with our estimates. Market conditions in Sweden remained favorable, and the demand picture in Finland is showing gradual improvement, with a brightening outlook for the remainder of 2025. Weather conditions were also beneficial during the quarter and supported a high volume of project starts, ultimately leading to a somewhat higher working capital tie-up in Q1. Order intake and backlog in Sweden were at a high level during the quarter and support a continued growth momentum in the coming quarters. Following the Q1 report, we have increased our revenue forecasts, while keeping our margin estimate largely unchanged. Given this, we continue to see the expected return at a very attractive level, driven primarily by estimated earnings growth for the coming years. Hence, we reiterate our Buy recommendation while increasing our target price to SEK 7.2 (was SEK 7.0).

Revenue in Q1 exceeded our expectations

NYAB delivered a strong start to the year, with Q1 revenue increasing 80% (y/y) to 107 MEUR, well ahead of our forecast of 92 MEUR. The growth was driven by the Dovre consolidation (~29 MEUR) but also through strong execution of the company’s order backlog, which also benefitted from the very early spring. Civil Engineering clearly exceeded our estimates, growing 31% year-on-year (Inderes est: 13%), particularly in Sweden where market conditions remained favorable. Consulting revenue was flat (+1% vs. est: -13%) year-on-year, mainly due to continued softness in Norway following regulatory changes related to temporary hires. EBIT came in at 1 MEUR (Q1’24: 0.4 MEUR), and 2.4 MEUR when excluding one-offs*, corresponding to a 0.9% margin (2.2%*). While the adjusted figure was in line with our estimates (2.3 MEUR), the reported EBIT was slightly below (Inderes est: 1.3 MEUR), due to higher-than-expected transaction costs in the quarter. Management reiterated that market conditions remained favorable in Sweden and noted further signs of gradual improvement in Finland.

We increase our revenue estimates, but keep margins intact

Following the stronger-than-expected revenue growth in Q1, coupled with the strong order backlog, we have increased our revenue estimates for 2025, with a follow-through effect for the rest of the forecast period. The upward revisions were mainly focused on the Swedish Civil Engineering operations, although we have also slightly increased our estimates for the Finnish operations and the Consulting segment as well. For 2025, we expect revenue to grow 52% (of which 15% organically) to 524 MEUR (was 487 MEUR). While our EBIT-% estimates remain largely unchanged, the increased revenue estimates resulted in a 6-8% increase in our EBIT estimates for FY25-27. For 2025, we estimate an adjusted EBIT of 34 MEUR (was 32 MEUR), reflecting an EBIT margin (adj.) of 6.5% (6.6%). Looking at the bigger picture, we expect NYAB to continue to grow at a decent pace beyond 2025 (26-28e: 10-6%). Similarly, we expect the margin to increase closer to the target level (26-28e adj. EBIT%: 6.9-7.2% vs. target >7.5%), driven, among others, by revenue growth, reduced seasonality, and implemented measures to improve the margin profile within the Consulting segment. For more details on our estimates, we refer to the updated Extensive report.

Still undervalued despite the stock’s recent appreciation

Despite the ~10% share price increase since our latest update (April, 2025), we continue to view NYAB as undervalued, as the stock remains priced closer to traditional construction providers. Based on our updated estimates, the adjusted P/E ratios for 2025 and 2026 are 15x and 12x, while the corresponding EV/EBIT ratios are 10x and 9x. As such, we continue to see a meaningful upside based on current and next year’s earnings-based multiples, considering our accepted multiple ranges (P/E: 12x-16x, EV/EBIT: 11x-15x). In addition, expected total return over the medium term is also well above our required return for the stock. Further support for our positive recommendation comes from our sum-of-the-parts as well as DCF model, which now stands at SEK 6.8-8.3 (prev. SEK 6.2-7.5) and SEK 7.2 (prev. SEK 6.9), respectively.