Pasila Update.
Today, apartment number 21 (39 m2/2 rooms + kitchen) sold.
Apartments sold as of 27.1.2025:
3, 9, 11, 15, 17, 19, 20, 21, 23, 25, 27, 38, 43, 48 and 50
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Only 42 apartments left in PasilaTower, meaning 20 have been taken.
One can also initially make a rental agreement for the property. I wonder if many are rented?
Apparently, you get a 10% discount if you buy it for ownership within 6 months.
An interesting scheme.
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Evliâs earnings preview.
In the same context, 5.0 (Hold) â 5.2 eur & Accumulate
-they have divided the old Hold -10%âŠ+10% â -10âŠ0% Reduce and 0âŠ+10% Accumulate
2025 will be like 2024, i.e. operating profit 16 MEUR with a 2.1% margin
Then 2026 will be 26 MEUR with a 3.3% margin, giving a P/E of 5.5.
Project mix to remain largely the same in 2025
We estimate net sales of EUR 733m and operative operating profit of EUR 10.2m for 2024E. We expect y/y revenue growth for Q4/24 driven by continued growth in non-residential while we expect residential net sales to decline. For Q4 operative EBIT, we forecast EUR 3.0m with margin of 1.5%. Although we project revenue growth, we anticipate that profitability will remain comparable to last yearâs figures due to the project mix. We expect positive NRIs to boost reported EBIT related to the companyâs sale of remaining stake in Pearl Plaza. For 2025E we estimate similar development to 2024, yet we expect that the company is able to sell some of its unsold residential inventory. With non-residential driven project mix in 2025, the margin potential remains limited.
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SRV has completed the construction contract: In Uusikaupunkiâs Wintteri, the papers for the start of the service period were signed yesterday. Now 20 years of cooperation with the city using a life cycle model. https://uudenkaupunginwintteri.fi/
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On SRVâs housing pages, the information is now up to date.
Based on this:
SRV has made a decision to commence the Niittykumpu project, because some of the apartments have already been sold. I deduce this because some of the apartments no longer appear even as reserved, but have been removed from the list.
In Vantaaâs three projects, only 32 apartments are still for sale, compared to about 45 apartments at the beginning of the year.
Pasilan Towerâs available apartments have been updated to 42.
Therefore, one would expect a press release from SRV soon regarding the commencement of the Niittykumpu project.
In the interim report, they will surely also report on sales made after the review period.
I assume that the sale of apartments that were in stock will bolster the 2025 result, and starting next year, the result will begin to grow due to projects commenced from now on.
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Recently, SRV announced the start of the Niittykumpu residential building, which was completely clear at the latest after apartments had been removed from the propertyâs listings.
Letâs see when the next self-developed project will come out of the pipeline.
News about the Oulu hotel is taking surprisingly long. Perhaps the difficulties faced by open-ended funds have caused a thinning out of interested investors, but hopefully not a complete collapse.
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Toivottavasti tuo Torihotelli sÀÀstettiin huomiseen osaripĂ€ivÀÀnâŠ
Laitetaan milestonen kunniaksi tiedote oheen, yli puolet talon asunnoista varattu. 7/2026 tuloutuu myydyin osin.
Ko sijainnilla on jo tÀysi toiminta pÀÀllÀ ja monttukin tehty, SRV rakentaa jollekin vakuutusyhtiölle samassa korttelissa jo kahta kerrostaloa, joista toinen harjassa ja toisesta nostettu kaksi kerrosta.
Voisi kuvitella laskevan rakentamiskustannuksia jonkin verran.
LisÀksi kerrotaan vÀhÀn muistakin aikeista / PK-seutu, Tampere, Turku.
MunkkiniemeÀ tuodaan esiin.
SRV COMPANIES PLC PRESS RELEASE FEBRUARY 5, 2025 AT 4:50 PM
SRV Launches Owner-Occupied Housing Project for the First Time Since 2022
SRV is commencing the construction and sale of a 53-apartment residential building in Espoo. Over half of the apartments in Asunto Oy Espoon Niittykummun Neuvokas have been reserved during the pre-marketing phase. Neuvokas is the first owner-occupied housing project whose construction SRV is launching after the significant market weakening that occurred in 2022. Construction of the project will begin immediately. SRVâs goal is to launch other consumer-sold projects this year, for example, in the Helsinki metropolitan area, Turku, and Tampere.
âOver half of Neuvokasâ apartments have been reserved during the pre-marketing phase, and we believe there is sufficient demand for life-cycle-wise homes in excellent locations with smooth transport connections. Factors anticipating a positive turn in the housing market are gradually strengthening, and falling interest rates, the melting away of housing oversupply, construction costs at their most affordable, and relatively strong population growth in cities will restore private demand,â says Jorma SeppĂ€, SRVâs Director of Housing Business in the Helsinki metropolitan area.
âOur goal is to launch selected housing projects in the Helsinki metropolitan area as well as in the Turku and Tampere regions. One of our planned housing projects is Karhunsammal in the Pohjola block, right next to Munkkivuori shopping center in Helsinki. Relatively few new owner-occupied apartments are being built in the area, and for that reason alone, Karhunsammal is a very special gem among new apartments,â SeppĂ€ continues.
Life-cycle-wise solutions reduce housing energy costs
In Neuvokas, life-cycle costs have been minimized. The use of renewable energy, geothermal heating, and a solar power system reduce housing energy costs, and upon completion, the building will achieve an A-energy class rating. Its location near a metro station, sustainable everyday solutions, and energy-efficient features make even a busy daily life smooth for years to come.
The green area in the yard has been maximized. The yard features climbing plants, pergolas, and a retention solution for stormwater. Diverse plantings have been chosen to support biodiversity. The pleasant yard also has exercise equipment for residentsâ use.
Consumers hoped for more square meters for remote work and investment in shared spaces
In the design of Neuvokasâ 53 apartments, consumer wishes for comfortable and functional homes were heard and implemented. Opinions were sought for the design, particularly regarding apartment layouts and the intended uses of spaces, both in individual apartments and within the housing company. Approximately one hundred consumers participated in the apartment design. Participants were able to express open wishes and ideas for comfortable homes and comment on existing drafts.
âThe responses clearly showed the growing popularity of remote work and diverse needs for the housing companyâs shared spaces,â says SeppĂ€.
As a self-developed housing project, Neuvokas will be recognized as revenue upon its completion, by July 2026 at the latest, according to the sales rate.
Learn more about Neuvokas homes here: Espoon Niittykummun Neuvokas
We also want to hear consumer views on Karhunsammal, planned for the Pohjola block, and you can provide them by answering the survey on our website at: Kyselytutkimusohjelmisto verkossa: kyselytutkimus suljettu
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Here are Olliâs comments on SRVâs Q4 results this morning.
SRV published a weaker-than-expected Q4 report on Thursday. In Q4, revenue rose strongly, driven by commercial construction, and thanks to strong volume, profitability also increased. However, profitability, both adjusted and reported, was a disappointment compared to our expectations. The outlook remains challenging heading into the year, and SRVâs guidance was clearly below our expectations. Revenue is expected to decline, and profitability does not have the prerequisites to rise to our expected level with the current project mix. A significantly stronger housing market is needed for a substantial improvement, but its effects will not be seen for SRV until 2026 at the earliest.
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Evliâs comments.
@Olli_Koponen if an interview is coming up, you could ask
- why such a vague and weak guidance as âpositive operative operating profitâ?
- market square hotel, wasnât it supposed to be built already by the end of 2024?
- whatâs that head office write-down thing?
SRV - 2025 outlook worse than expected
SRVâs net sales in Q4 amounted to EUR 209.1m, slightly above our estimate of EUR 196.0m. While volumes beat, operative EBIT matched our estimate at EUR 3.0. Although we anticipated subdued prospects for 2025, the outlook adds additional downward pressure to our estimates.Revenue in Q4 was EUR 209.1m (EUR 181.8m in Q4/23), slightly above our estimate of EUR 196.0m. Revenue grew 15.1% y/y.
The operative operating profit in Q4 amounted to EUR 3.0m (EUR 2.4m in Q4/23), in line with our estimate of EUR 3.0m.
Reported EBIT was lower than we estimated due to write-down on the lease agreement for SRVâs current head office.
SRVâs signed new agreements worth EUR 66.0m (EUR 253.1m in Q4/23).
The order backlog in Q4 was EUR 1052.8m (EUR 1048.6m in Q4/23).
Business construction revenue in Q4 was EUR 191.5m, (EUR 175.0m Evli estimate) up 25% y/y. Growth was driven by project management and alliance contracts, particularly due to hospital project construction.
Housing construction revenue in Q4 was EUR 17.5m (EUR 15.4m Evli estimate). Housing construction remained quiet as expected, with 520 residential units under construction (all contracts).
SRV outlook for 2025: Revenue is expected to decline compared with 2024 and to amount to EUR 630-710m (Evli current est. EUR 782.5m) and operative EBIT is expected to be positive (Evli current est. EUR 16.3m).
Yesterday SRV released that it is starting the construction of a developer-contracted project in Espoo, this marks the first developer-contracted project start since 2022.
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@Olli_Koponen if an interview is coming up, one could also ask
- does the head office write-down have a cash flow impact,
- how does the sale of completed apartments in January affect the 2025 result and how will future sales affect the 2025 result
- regarding the Pasila residential property, how has SRV ensured that tenants have the actual ability to buy the apartment later
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I asked about similar things, even though I didnât get to notice these before the earnings release.
I can also answer these myself.
The write-down is not cash-flow impacting.
According to our understanding, the Pasila apartments have been rented, not sold. The final sale will only appear later in SRVâs interim reports, if the customer decides to buy it.
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Thank you for the answer.
I was under the impression that the write-down was related to the risk that the company would not be able to re-rent the Perkkaa property at the rental level paid by SRV until the end of the lease agreement, so the difference would have been written down. In that case, the difference would be visible in cash flow, not yet, of course, but over the next four years.
I have also been thinking that the Pasila apartments have been rented with the idea that the customer buys the apartment for themselves within the next 6 or 12 months. My consideration relates to how SRV has tried to ensure that the person is serious about buying, because the apartments are presumably rented only to individuals who are seriously considering buying it within 6/12 months.
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Olli interviewed SRVâs CEO Saku Sipola and CFO Jarkko Rantala soon after the Q4 results. 
Topics:
00:00 Introduction
00:16 2024 Highlights
01:27 Project Progress
02:03 Head office lease agreement write-down
03:19 Funds finally released from Pearl Plaza
04:03 Market and Order Book
05:40 Investor Demand
06:45 Guidance
08:03 Impact of Market Recovery on Results
08:54 Garden Helsinki Project
09:50 Oulu Torihotelli Project
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Considering the companyâs order backlog (slightly over 1 billion) and the duration of the contracts included in the order backlog, as well as the amount of revenue generated from these contracts in 2025, it is difficult to estimate the final revenue at this point in the year, given the uncertainty about securing new contracts that will generate revenue this year and the significant uncertainty still associated with the start of self-developed housing projects this year.
If a good number of contracts are started this year and more self-developed housing projects get underway than anticipated, the revenue and profit forecasts could still shift considerably.
Regarding the forecast now provided, the question is mainly about the forecasting method, because surely the rather large difference in revenue between Inderesâ forecast and the companyâs own forecast cannot be due to the recognition of contracts already in the order backlog in 2025, or how do you see this, @Olli_Koponen?
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Well, we already initially perhaps thought more that self-developed projects would more strongly support revenue already this year, both in the commercial and residential sectors. As things stand, it seems that SRV sees revenue coming more from contracting and that significant growth would not be achieved from the private market this year. A lot can still change during the spring, but when reading the report and listening to the comments, that recovery looks challenging in the short term. The company also commented that the margin structure of the order book consists more of low-margin contracting than in 2024, which weakens the possibility of earnings growth this year.
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Thank you for the answer.
Letâs keep an eye on market developments. Regarding self-developed residential construction, itâs largely a matter of changes in general sentiment and interest rate levels. In addition, the company should find micro-locations where there would be demand for owner-occupied homes even in an emerging market. They should aim for desired residential areas. In Helsinki, there are many areas where there is constant demand for owner-occupied homes, one good example being Lauttasaari, where SRV has at least a sizable project coming up for the Hedegren office building site. Hopefully, they are also active in other locations on the island.
In my opinion, a significant leap in results for 2027 is very possible, provided that self-developed residential construction genuinely starts to pick up during H2/2025 and onwards, allowing several projects to be started in H2/2025 and H1/2026 for completion during 2027.
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Olli and SRVâs new company report
Considering market conditions, 2024 went well for SRV. However, based on the outlook and guidance, the weak market situation continues, and the 2025 result will be weaker than our previous expectations. SRVâs potential is higher than the current earnings level, but the prolonged weakness of the economic cycle keeps uncertainty high, and in our opinion, there is no upside potential in the stock right now, considering the risks.
Quoted from the report:
Reflecting the outlook for the current year, the order book turned from strong growth to the comparison periodâs level of EUR 1053 million in Q4 (Q4â23: EUR 1049 million). After the large public commercial property projects, the level of the order book now needs a pick-up in the private market to achieve growth again.
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Evli: 5.2 (Accumulate) â 4.8 eur & Reduce
The weakness in the outlook does not please Evli, and a brilliant future is postponed.
However, based on Evliâs figures, the 2025 valuation would be tolerable, P/E 11.3
The 2026 P/E would then be only 5.6.
Developer-contracted apartments should be recognized in the income statement, through revenue.
SRV - Stays on the defensive
SRVâs Q4/24 figures largely matched our expectations, yet the 2025 outlook left much to be desired. We were hoping to see a spark of offense, but it seems 2025 is shaping up to be another year of playing full defense for the company as especially the residential market continues to be on a standstill.
Figures broadly in line, while orders slightly below expectations
Revenue for Q4 was EUR 209.1 million, compared to EUR 181.8 million in Q4/23, slightly surpassing our estimate of EUR 196.0 million. This represents a y/y growth of 15% which was solely led by non-residential construction as was expected. The operational operating profit for Q4 was EUR 3.0 million, matching our estimate and up from EUR 2.4 million in Q4/23. The order backlog for Q4 remained consistent with the previous year at EUR 1052.8 million, compared to EUR 1048.6 million in Q4/23. However, SRVâs new agreements totaled EUR 66.0 million, falling short of EUR 253.1 million for Q4/23.
Third time the charm for a H2 market rebound?
SRVâs outlook was weaker than we had expected for 2025. SRV now expects FY 2025E net sales to amount to EUR 630-710m and operative EBIT to be positive. We have revised our estimates, and we now estimate net sales of EUR 707m for 2025 with operative EBIT of EUR 7.8m. We model net sales decline for non-residential construction while previously we estimated growth of 5% y/y. Our non-residential net sales forecast is driven by the backlog where the development was weaker than expected in Q4. Number of apartments under construction at the end of Q4 grew both q/q and y/y yet were still at relatively low levels and comprised solely of contracting. As a positive, SRV released that it is starting the construction of a developer-contracted project in Espoo, this marks the first developer-contracted project start since 2022. In addition to the Espoo project, the company has one project in pre-marketing in Tampere. We expect further developer-contracted starts in H1/25 that could be recognized as income during 2026. While residential pick-up is evident in the coming years, we see the companyâs long-term targets increasingly challenging to reach.
REDUCE (ACCUMULATE) with a TP of EUR 4.8 (EUR 5.2)
We revise our TP to EUR 4.8 and recommendation to REDUCE. While we continue to see the long-term upside high, the market turn seems to take its time. We expected 2025 to be challenging for the company due to sales mix, yet the outlook was still a letdown. Based on our revised estimates, the pricing appears elevated for 2025E, whereas it is relatively neutral for 2026E.
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Jussi Halme made a video about the construction industry, and it also touched upon SRV a little bit.
The construction industry is highly cyclical, capital-intensive, and susceptible to external risks. High interest rates, inflation, and fierce competition are weighing on the results of YIT and SRV, and no significant recovery is yet visible in the market. But could Finnish construction companies still be an interesting investment target? I will go through the latest results, market outlook, and risks and opportunities for YIT and SRV.
50 million euro deal, with summer demolition work to begin in 2025
SRV to implement a wood-framed Nissnikku multi-purpose building in Kirkkonummi as a life cycle project
SRV and the Municipality of Kirkkonummi have signed an agreement for the implementation of the Nissnikku multi-purpose building in Kirkkonummi as a life cycle project. SRV is responsible for the projectâs design, construction, and property maintenance for 20 years under a life cycle responsibility. The project will provide facilities for Nissnikku comprehensive schoolâs grades 1-9, Masala library, and youth facilities. The total value of the agreement for SRV, including life cycle services, is approximately 50 million euros. The construction order will be recorded in February. Construction work will begin with demolition in summer 2025, and the site is scheduled for completion in December 2027.
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