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1. Company Snapshot

1.a. Company Description

Sdiptech AB (publ) provides technical products and services for infrastructures in Sweden, the United Kingdom, Germany, Croatia, Austria, Norway, Finland, and internationally.The company operates through three segments: Water & Energy, Special Infrastructure Solutions, and Property Technical Services.It engages in the service, renovation, modernization, and new construction, as well as renovation of roof.


The company also provides water and sewage treatment, water systems, and water purification services; power supply, electrical automation, and temporary electricity services; air and climate control products and services to monitor and control indoor climate, air quality, and energy efficiency.In addition, it offers safety and security services for secure communication and integrated security systems in public and private environments; and digital technology for speed monitoring and infrastructure for air traffic communication.Sdiptech AB (publ) was founded in 2004 and is based in Stockholm, Sweden.

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1.b. Last Insights on SDIP

Sdiptech AB's recent performance was negatively driven by profit margin pressures and restructuring hurdles, despite a 7% sales increase and strategic acquisitions. The company's Q3 2024 earnings call highlighted challenges in navigating growth, with profit margins under pressure due to increased costs and investments in new business areas. Restructuring efforts are underway to address these issues, but the impact on profitability remains uncertain.

1.c. Company Highlights

2. Sdiptech's Q3 Earnings: A Mixed Bag

Sdiptech reported a 9% increase in net sales to SEK 1,102 million, driven by 4.5% organic growth and 9% growth from acquisitions. The adjusted EBITA margin remained stable at 21.3%, with a 9% increase in adjusted EBITA to SEK 235 million. However, the company's EPS came in at 2.82, missing estimates of 3.5. The cash flow was strong, with a 94% cash conversion due to improved inventory levels and lower tax payments, resulting in SEK 255 million of free cash flow generated in the quarter.

Publication Date: Oct -28

📋 Highlights
  • Strategic Restructuring: Divesting 11 companies (7% of year-to-date EBITA) with a SEK 500M goodwill write-down to focus on high-growth product-based businesses.
  • Financial Growth: Net sales rose 9% to SEK 1,102M (4.5% organic), and adjusted EBITA increased 9% to SEK 235M, maintaining a stable 21.3% margin.
  • Operational Performance: Safety & Security excelled, while Energy & Electrification underperformed; Water & Bioeconomy maintained strong performance despite cost pressures.
  • Cash Flow Strength: Generated SEK 255M free cash flow with 94% cash conversion, driven by lower taxes and inventory optimization, despite higher leverage from earn-out payments.
  • Future Outlook: Targeting 2026 recovery with disciplined M&A (SEK 40M EBITA acquired YTD), reduced leverage goals, and cautious optimism amid Q4 seasonal uncertainties.

Business Area Performance

The company's four business areas had a mixed performance, with Safety & Security having a strong quarter driven by favorable market trends, while Supply Chain & Transportation began to recover after a weaker first half. Energy & Electrification had a mixed performance, and Water & Bioeconomy performed well despite cost pressure. As CEO Anders Mattson noted, "We see solid underlying demand, especially with a majority of our companies having stable demand in Q3."

Strategic Shift and M&A

Sdiptech is implementing a strategic shift to focus on product-based companies with strong underlying growth drivers and a clear niche, resulting in the divestment of 11 companies. The company has a strong pipeline for acquisitions and is disciplined in its valuation, stepping away from two deals in the quarter due to high valuation. With SEK 40 million in EBITA acquired year-to-date, Sdiptech is confident about its ability to drive growth through M&A.

Valuation and Outlook

With a P/E Ratio of 26.03 and an EV/EBITDA of 9.34, Sdiptech's valuation appears to be pricing in a certain level of growth. Analysts estimate revenue growth at 5.5% next year. While the company's leverage increased due to earn-out payments, the total net debt compared to adjusted EBITA decreased since the new year. Sdiptech's ROIC is 5.92%, and ROE is 6.71%, indicating a decent return on capital. The company's guidance for Q4 is uncertain, but it expects comparable numbers to be influenced by divestments and seasonal factors.

Conclusion on Financial Health

The company's financial health is reflected in its Free Cash Flow Yield of 7.41%, indicating a strong ability to generate cash. The Net Debt / EBITDA ratio is 2.96, which is manageable. With a stable business area organization being established, Sdiptech is well-positioned to execute on its initiatives, including divestments and M&A activities, without losing momentum or sacrificing quality.

3. NewsRoom

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Sdiptech AB (FRA:938) Q3 2025 Earnings Call Highlights: Strategic Moves Drive Growth Amid Challenges

Oct -27

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Sdiptech (OM:SDIP B) Profit Margin Drop Challenges Growth Optimism in Latest Earnings

Oct -25

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Sdiptech AB (FRA:938) Q2 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...

Jul -21

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European Undervalued Small Caps With Insider Action For March 2025

Mar -18

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Undervalued Small Caps With Insider Action To Watch In February 2025

Feb -14

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Sdiptech AB (FRA:938) Q3 2024 Earnings Call Highlights: Navigating Growth and Challenges

Oct -26

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Sdiptech AB (publ) - Parts of the management in Sdiptech sell shares for private reasons

May -15

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Sdiptech AB (publ) publishes interim report for the first quarter (January-March) 2024

Apr -25

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.68%)

6. Segments

Special Infrastructure Solutions

Expected Growth: 10%

Sdiptech AB's Special Infrastructure Solutions segment growth is driven by increasing demand for sustainable and efficient infrastructure, urbanization, and government investments in infrastructure development. Additionally, the company's focus on innovative solutions, strategic acquisitions, and expansion into new markets contribute to its 10% growth rate.

Resource Efficiency

Expected Growth: 12%

Sdiptech AB's 12% growth in Resource Efficiency is driven by increasing demand for sustainable solutions, stringent environmental regulations, and rising energy costs. The company's innovative products and services, such as energy-efficient pumps and water treatment solutions, are in high demand. Additionally, strategic acquisitions and partnerships have expanded the company's offerings and geographic reach, contributing to its rapid growth.

7. Detailed Products

Water Treatment

Sdiptech's water treatment solutions provide efficient and sustainable ways to manage water and wastewater. The company offers a range of products and services to remove contaminants, reduce waste, and optimize water usage.

Wastewater Management

Sdiptech's wastewater management solutions focus on efficient and sustainable ways to collect, treat, and reuse wastewater. The company offers a range of products and services to reduce wastewater volumes, remove pollutants, and generate biogas.

Sludge Handling

Sdiptech's sludge handling solutions provide efficient and sustainable ways to manage sludge from wastewater treatment plants. The company offers a range of products and services to reduce sludge volumes, generate biogas, and produce biofertilizers.

Biogas Upgrading

Sdiptech's biogas upgrading solutions provide efficient and sustainable ways to upgrade biogas from wastewater treatment plants, landfills, and agricultural facilities. The company offers a range of products and services to produce high-quality biomethane.

Odor Control

Sdiptech's odor control solutions provide efficient and sustainable ways to manage and eliminate unpleasant odors from wastewater treatment plants, industrial facilities, and commercial properties.

8. Sdiptech AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Sdiptech AB (publ) is moderate due to the availability of alternative solutions in the market.

Bargaining Power Of Customers

The bargaining power of customers for Sdiptech AB (publ) is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Sdiptech AB (publ) is moderate due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for Sdiptech AB (publ) is high due to the low barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for Sdiptech AB (publ) is high due to the presence of several established players in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 38.96%
Debt Cost 10.10%
Equity Weight 61.04%
Equity Cost 11.14%
WACC 10.74%
Leverage 63.82%

11. Quality Control: Sdiptech AB (publ) passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Elecnor

A-Score: 5.7/10

Value: 5.8

Growth: 6.4

Quality: 3.2

Yield: 8.1

Momentum: 8.0

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
Costain

A-Score: 5.0/10

Value: 6.3

Growth: 4.4

Quality: 5.5

Yield: 2.5

Momentum: 8.0

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Luceco

A-Score: 4.8/10

Value: 6.0

Growth: 5.0

Quality: 5.1

Yield: 6.2

Momentum: 2.5

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Piovan

A-Score: 4.4/10

Value: 1.7

Growth: 6.7

Quality: 5.6

Yield: 1.9

Momentum: 5.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Starrag

A-Score: 4.0/10

Value: 8.5

Growth: 2.7

Quality: 3.6

Yield: 5.6

Momentum: 0.5

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Sdiptech

A-Score: 3.9/10

Value: 5.7

Growth: 8.4

Quality: 5.0

Yield: 0.0

Momentum: 1.0

Volatility: 3.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

187.6$

Current Price

187.6$

Potential

-0.00%

Expected Cash-Flows