Infrea: Solid ground, soft comps - ABG
This is a third party research report and does not necessarily reflect our views or values
- Q2 report Tuesday, 18 April at 08:30 CET
- '25e-'27e adj. EBITA up 7-1%
- 10-7x EBITA in '25e-'27e, 13-14% FCF yields
Summer lies ahead
We expect Infrea to deliver a solid Q2 report with both organic growth and earnings improvements. Jonab and DUO Asfalt announced new orders during the quarter (SEK 150m combined) and NATO agreed on a spending target of 5% of BNP, of which 1.5% is on infrastructure and civil defence, highlighting the positive market momentum and continued order intake for Infrea. In terms of organic growth, we expect +5% (+29% in Q1), as the market is slowly starting to move forward in Land and Construction (+5%) and Asphalt (+6%). We expect sales of SEK 607m, +3% y-o-y, and we forecast adj. EBITA of SEK 30m, + SEK 12m y-o-y, with a margin of 5% (3% Q2'24), on easy comps while the internal focus continues.
Estimate changes
We raise '25e-'27e adj. EBITA by 7-1%, as we are more confident in support from ambitious financial targets (above 6% EBITA margin) and the new NATO defence spending agreement supporting demand for Infrea's business. We now forecast adj. EBITA in '25e of SEK 59m (SEK 30m in '24), accelerating to SEK 61m and SEK 74m in 2026e and 2027e, respectively, as margins improve from 1.5% in '24 to 3.1% in '27e.
Margins to improve and FCF to stabilise
We believe Infrea is well-positioned to grow organically and improve margins given its exposure to underlying demand and exposure to public customers (~55%), alongside support from M&A (24% sales CAGR in '20-'23). For '24-'27e, we expect Infrea to deliver growth, margins, and FCF in line with peers. The share is currently trading at 10-7x EBITA with a 13-14% FCF yield.
- '25e-'27e adj. EBITA up 7-1%
- 10-7x EBITA in '25e-'27e, 13-14% FCF yields
Summer lies ahead
We expect Infrea to deliver a solid Q2 report with both organic growth and earnings improvements. Jonab and DUO Asfalt announced new orders during the quarter (SEK 150m combined) and NATO agreed on a spending target of 5% of BNP, of which 1.5% is on infrastructure and civil defence, highlighting the positive market momentum and continued order intake for Infrea. In terms of organic growth, we expect +5% (+29% in Q1), as the market is slowly starting to move forward in Land and Construction (+5%) and Asphalt (+6%). We expect sales of SEK 607m, +3% y-o-y, and we forecast adj. EBITA of SEK 30m, + SEK 12m y-o-y, with a margin of 5% (3% Q2'24), on easy comps while the internal focus continues.
Estimate changes
We raise '25e-'27e adj. EBITA by 7-1%, as we are more confident in support from ambitious financial targets (above 6% EBITA margin) and the new NATO defence spending agreement supporting demand for Infrea's business. We now forecast adj. EBITA in '25e of SEK 59m (SEK 30m in '24), accelerating to SEK 61m and SEK 74m in 2026e and 2027e, respectively, as margins improve from 1.5% in '24 to 3.1% in '27e.
Margins to improve and FCF to stabilise
We believe Infrea is well-positioned to grow organically and improve margins given its exposure to underlying demand and exposure to public customers (~55%), alongside support from M&A (24% sales CAGR in '20-'23). For '24-'27e, we expect Infrea to deliver growth, margins, and FCF in line with peers. The share is currently trading at 10-7x EBITA with a 13-14% FCF yield.