NYAB involved in Uppsala Tramway project through joint venture

Translation: Original published in Finnish on 10/30/2024 at 7:04 am EET.

The company announced on Tuesday that it has been selected, together with Azvi, as the general contractors for the Uppsala Tramway project. The companies will operate the project through an integrated joint venture, where both parties have a 50% participation. At the same time, they have been awarded an order for Phase 1 of the project, which includes design work, procurement of subcontractors, establishment of a production schedule as well as calculation of costs. NYAB estimates that Phase 1 will have a value of 150-200 MSEK (13-18 MEUR) for the joint venture. Meanwhile, Phase 1 is expected to be completed within 11 months of the contract signing. In accordance with the Swedish Public Procurement Act, the order is subject to a 10-day appeal period, after which a contract can be signed. 

In addition, the company expects that its participation in Phase 1 makes it well-positioned to receive an order for Phase 2, which includes the actual construction work. Phase 2 will also be significantly larger in size and NYAB estimates that it would have a total value of as much as 5 BNSEK (440 MEUR) for the joint venture. The project's value will be specified during Phase 1. Orders for Phase 2 will be placed separately at a later stage, but the project is planned to start in 2025 and be completed in 2029.

Phase 2 contract would provide significant support to growth forecasts

We see the impact of the first phase of the project for NYAB as rather limited relative to its overall size (revenue 2024e: 344 MEUR). However, with the successful winning of Phase 1, we believe that the selection of the joint venture for Phase 2 is also very likely, as the company has commented. If secured, Phase 2 of the project would also be quite significant for NYAB on a roughly annualized basis (4-5 years) (50% of the project 44-55 MEUR/year). Thus, if realized at the proposed scale, it would significantly support the company's growth strategy and our forecast of continued strong growth in the coming years (revenue 2025e-2027e: 394-463 MEUR). However, at this stage, the news has no immediate impact on our forecasts or our view of the company. We will review our forecasts at the latest in connection with the company’s Q3 results, which it will publish on November 6.