Solwers' Q2 sales were largely in line with our expectations, but profitability was clearly below, similar to Q1. One-off costs hampered performance in H1, a total of EUR ~1m year-to-date. Q2 EBITA of EUR 0.9m was 50% below our estimate and EBIT was EUR 0.1m, versus our estimate of EUR 1.2m. The company aims to implement cost savings of almost EUR 1m compared to the 2024 cost level. The order backlog remained solid and the billing rate improved y/y. Project starts in Sweden appear to have been postponed and the Swedish operations performed worse than the Finnish ones. Following the Q2 report, we cut our top line by 1% for 2025E-27E, while we lower EBIT by 10-24% for 2026E-27E and clearly more for 2025E. We hence derive a lower DCF- and peer-based fair value range of EUR 3.0-3.5 (3.5-4.1), which includes EUR 0.6 per share for the present value of unannounced acquisitions. The waiver received for the financing agreement covenant could limit the company's appetite for new M&A in the medium term, although it has a strong cash position. Marketing material commissioned by Solwers.
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