* Organic growth back in positive territory
* We raise '27e-'28e adj. EBITA by 3%
* Trading at 6/5x adj. EV/EBITA on '27e/'28e, ~30% below peers
Growing with fewer hands
In tough market conditions, Prevas has made several changes to turn the situation around, and Q3 was strong, with organic growth of 0.5% despite fewer FTEs y-o-y. We think the numbers are starting to stabilise, but although a recovery has started, we do not expect a sharp acceleration in organic growth in the near term. The adj. EBITA margin recovered to 8.4% (5.7% in Q2), which we view as a clear sign that the cost measures are paying off.
Finland is the swing factor for '27e
With Sweden close to 10% margins and Denmark back to profit, Finland is now the main lever for group margins. At 1.5% (8.5% in Q3'25), the margin is far from where it was, but we think the hardest work has been done. Pulp and paper and Valmet are now a small part of the business, so the downside has largely been taken, while defence and data centres can bring in new customers. To put it in perspective, a return to a ~6% margin in Finland alone would add ~0.5pp to the group margin, which we think is achievable in '27e as projects ramp up. We therefore raise our '27e-'28e adj. EBITA by 3%.
Demand is becoming more structural
Demand is becoming more structural, driven by defence, regulation such as the CRA and the Machinery Regulation, and EAM, where several large multi-year orders add recurring licence revenue. This should make Prevas less dependent on large capex projects than in previous cycles. On our revised estimates, Prevas is trading at 6/5x EV/adj. EBITA on '27e/'28e, ~30% below median peers, despite higher margins and stronger long-term growth prospects, in our view.