Strong prerequisites for a turnaround
We raise our recommendation to Accumulate (previous Reduce) and raise our target price to 3,0 euro (previous 2,6 euro). SRV’s result development has been weak in recent years, especially due to cost overrun in large projects and a weakening Russian ruble. We estimate that SRV’s result will turn to strong growth over the next 12 months as the flow of rental income from shopping malls strengthen, the margin structure of contracting becomes healthier, and the net sales of SRV’s developer contracted housing projects turns to growth. We see upside potential in the share compared to the result forecasts, equity book value, and sum of parts but the high risk level and emergent economic turn depress the valuation indicators.
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SRV Group
SRV Group operates in the construction industry. The main specialist competence is in project management of construction projects for the commercial sector. The projects are mainly focused on the development of business premises, residential buildings, and other infrastructural projects. The largest operations are found around major growth locations in Europe. The company was established in 1987 and is headquartered in Espoo.
Read more on company pageKey Estimate Figures16.09.2018
2017 | 18e | 19e | |
---|---|---|---|
Revenue | 1,114.4 | 983.0 | 1,129.1 |
growth-% | 26.09 % | -11.79 % | 14.86 % |
EBIT (adj.) | 28.0 | -8.6 | 45.2 |
EBIT-% (adj.) | 2.51 % | -0.88 % | 4.00 % |
EPS (adj.) | 0.26 | -0.37 | 0.40 |
Dividend | 0.06 | 0.00 | 0.12 |
Dividend % | 1.67 % | 2.33 % | |
P/E (adj.) | 13.87 | - | 12.86 |
EV/EBITDA | 24.37 | - | 11.89 |