Solwers: Weak Q1 and covenant waiver concerns - Nordea

Solwers' Q1 results remained weak, with profitability still at an unsatisfactory level. Net sales of EUR 21.0m came in 4% below our estimate, while adjusted EBITA of EUR 0.3m was 51% below our estimate. The company also highlighted that in March, net debt/EBITDA remained within the limits set by the covenant waiver, which is valid until the end of June 2026, but management recognises the risk that the original covenant threshold may not be met on the 30 June testing date. We believe the covenant waiver could be extended, but Solwers needs to improve its profitability clearly; the main concern is profitability, not the level of debt, we argue. Solwers guides for EBITA to improve in 2026 from EUR 1.1m in 2025; we expect EUR 3.1m. Following the Q1 report, we trim our top-line estimates by 1% for 2026-28 and cut adjusted EBITA by 5-13%. We derive a virtually unchanged DCF- and peer-based fair value range of EUR 2.6-3.0 (2.5-3.0), including EUR 0.4 per share for the present value of unannounced acquisitions.