Translation: Original published in Finnish on 06/10/2026 at 08:00 am EEST

Sitowise announced yesterday that it will divest its loss-making Swedish technical consulting business to Sweco. The transaction price is very low compared to the capital originally invested in the market, but cutting losses removes the uncertainty related to the Swedish earnings turnaround and lowers the share's risk profile. We made initial changes to our estimates. We raise our target price to EUR 3.1 (was EUR 2.6), and we lower our recommendation to Reduce (was Accumulate) as the valuation has become neutral.

Healthy profitability in Infra and Digital in Finland

With the sale of its Swedish technical consulting business (read our previous comment), Sitowise will now focus on its three core businesses: the highly profitable Finnish Infra and Digital Solutions segments, and the Buildings segment, which has recently broken even. We estimate Sweden's EBITA loss in 2025 to be around 4 MEUR, which would cut almost a third of the profit generated by Finland. The company will report the Swedish unit as a discontinued operation starting from the Q2'26 report, and at the same time, a non-cash impairment (of around 18 MEUR) will be recognized for the Swedish subsidiary. Prior to the Q2 report, the company promised more detailed comparison figures excluding Sweden, but we have already made preliminary revisions to our forecasts at this stage. The transaction is expected to be completed during Q3/26.

Swedish impact has been removed from our estimates

Our operational estimates for the coming years remain largely unchanged, excluding Sweden. Overall, we expect Sitowise's revenue to decline by 8% in 2026 and that its adjusted EBITA margin will rise to 7.2% (2025: 4.7%) as the unprofitable Swedish operations will only be visible in Q1'26 in continuing operations. In absolute terms, our 2026 EBITA forecast increased to 12.5 MEUR (was 11.5 MEUR). For 2027, we had previously estimated Sweden to organically reach break-even in terms of EBITA, and removing Sweden from our forecasts is mainly reflected in revenue.

In the big picture, we still expect a clearer market recovery to begin in Finnish construction in 2027, with market growth accelerating and price competition gradually easing. Data center construction is already positively reflected in our estimates this year. We expect the high-margin product sales of Digital Solutions to continue their steady growth both in Finland and increasingly internationally. In the longer term, we expect operational leverage to support margin improvement towards the company's targeted 10% EBITA margin. Removing Sweden from our estimates clearly facilitates achieving the target, but at the same time, it removes some of the company's growth potential. Nevertheless, we view the arrangement as positive overall, and it also slightly supports the Group's cash flow (3 MEUR purchase price). Cutting losses in Sweden also helps the company gradually move towards its net debt/EBITDA target of below 3.0x (our 2026 estimate without Sweden is 3.5x). We have also slightly lowered our high financial cost estimates due to the transaction.

Vvaluation is now relatively neutral from different perspectives

With our current estimates, the EV/EBITDA ratio is elevated at 10x in 2026. Financial expenses erode net profit, which leads to an even higher P/E ratio of >100x. However, it is clear that the company's earnings potential is significantly higher than the current level because the company is now operating at the bottom of the residential construction cycle in Finland, which is reflected in the Buildings business. Therefore, we believe that the 2027 valuation (EV/EBITDA: 7x, P/E: 16x), as well as the one for 2028 (EV/EBITDA: 6x, P/E: 10x), better reflect Sitowise's valuation in relation to the company's normalized earnings performance. The stable cash flow profile of the Finnish operations also led us to cut our required rate of return for the share, and the value indicated by the DCF is now EUR 3.2 per share. From various perspectives, we believe the valuation appears neutral overall at the current share price.