Translation: Original published in Finnish on 3/31/2026 at 8:00 am EEST.

We raise the target price for Kreate, which issued a positive profit warning yesterday, to EUR 16.0 (was EUR 15.0). We maintain our Accumulate recommendation. In addition to the current year, we see positive drivers supporting future year volumes, including multi-year projects in the current portfolio, strengthening private sector demand – particularly in data center construction – and growth potential in other Nordic countries. Conversely, the geopolitical situation in the Middle East is putting upward pressure on construction costs. Nevertheless, we estimate that the company is now much better prepared for such a situation than it was during the previous cost shock. Furthermore, Kreate's comments suggest that the crisis has not dampened demand outlooks in growth segments.

Guidance ranges increased sharply

Kreate issued a very clear positive profit warning yesterday. The company now expects its revenue for 2026 will be 510-550 MEUR (previous 430–470 MEUR), which would represent a 62–75% increase compared to 2025 revenue of 315 MEUR. Profitability guidance also increased significantly. The company now expects an EBITA of 18–22 MEUR, compared to the previous EBITA guidance of 15–18 MEUR. This year's revenue and profitability are supported by the acquisition of SRV Infra (now Kreate Rock), the record-high order book at the end of last year, and a particularly strong portfolio of projects in the development phase. The technical driver behind the raised guidance is a change in the KFS Finland Oy joint venture's shareholder agreement, which strengthens Kreate's control over the company. Kreate will assume the chairmanship of the company's board and a decisive vote, leading to the consolidation of the company as a subsidiary. The change in reporting method is estimated to increase Kreate's reported revenue by approximately 30 MEUR in the current financial year. This change in reporting method does not affect the result, and, according to the company, the relative profitability of the combined entity at the EBITA level does not differ significantly from before. As a result of the change, KFS’s assets and liabilities will be consolidated into Kreate’s consolidated balance sheet. We expect the net impact of the change to increase the consolidated balance sheet by less than 20 MEUR.

Earnings growth outlook brightens for the current year

Kreate commented that the outlook for the rest of the year has strengthened among private-sector customers. In our view, this reflects the company's strong position in, for example, data center projects and other demanding industrial construction, which compensate for the softness in other new private construction. According to Statistics Finland, the number of building permits for transport and communications buildings (which includes data center construction) continued to grow strongly in the second half of 2025, and this growth has remained robust in January of this year. In addition to the strengthened outlook for the private sector, Kreate has recorded significant public projects in its order book earlier this year as they progressed to the implementation phase (incl. Tampere passenger railway yard phase 2 and Kurkela-Kuusisto). In addition, the company still has several large projects in the development phase (incl. phase 2 of the Vantaa tram line and the Junatie metro bridge), which support the volume outlook for this and future years.  We have included KFS in our estimates and raised our estimates for the organic growth of both the Finnish and Swedish businesses for the current year.

Valuation is cheap

Based on our updated 2026 estimates, Kreate's share is valued at 9x adj. EV/EBIT and 10x P/E multiples. Relative to our acceptable valuation (EV/EBIT & P/E: 10-12x), the valuation seems attractive. Although the current year is exceptional for the company in terms of revenue growth, we believe that a strong volume level will be maintained in the coming years as well. Additionally, we believe the company has good opportunities to improve its relative profitability. In addition to the outlook for earnings growth, the share offers an annual dividend yield of around 5-6%, according to our estimates, which further supports the expected overall return.