Infrea: Infrastructure tailwinds to lift margins - ABG
* Q3 report Friday, 7 April at 08:30 CET
* '25e-'27e adj. EBITA up 5-2%
10-6x EBITA in '25e-'27e, 23-14% FCF yields
ANNONS
Investments will come
We expect Infrea to deliver a Q3 report with both organic growth and earnings improvements. During the quarter, the Swedish Transport Administration (Trafikverket) submitted its proposal for the 2026–2037 national infrastructure plan to the government. Trafikverket estimates that the plan will cost SEK 1,171bn to implement, consisting of SEK 607bn in new investments and SEK 564bn in maintenance. While the total size of the package was already known, the split between new investments and maintenance was not. Furthermore, at a recent lunch meeting with Sveriges Kommuner och Regioner (SKR), a representative told us that the municipalities think water and sewage are the no. 1 areas in terms of investment need. In our view, this points to the increased spending on infrastructure that Infrea will capitalise on ahead.
Estimate changes
We raise '25e-'27e adj. EBITA by 5-2%, as we are more confident in support from ambitious financial targets (above 6% EBITA margin) and the infrastructure budget is supporting demand for Infrea's business. We still think the market is regionally tough in some areas, but we believe Infrea can navigate the landscape and defend its margins. We now forecast adj. EBITA in '25e of SEK 58m (SEK 30m in '24), accelerating to SEK 60m and SEK 74m in 2026e and 2027e, respectively, as margins improve from 1.5% in '24 to 3.1% in '27e.
Margins to improve and FCF to stabilise
We believe Infrea is well-positioned to grow organically and improve margins given its exposure to underlying demand and exposure to public customers (~55%), alongside support from M&A (24% sales CAGR in '20-'23). For '24-'27e, we expect Infrea to deliver growth, margins, and FCF in line with peers. The share is currently trading at 10-6x EV/EBITA with a 23-14% FCF yield.
