Kempower Q3'25: International expansion in power mode

Translation: Original published in Finnish on 10/29/2025 at 11:39 pm EET

Source: Inderes & Modular Finance (consensus: 7 analysts)

The Q3 earnings release strengthened the long-term earnings growth outlook for Kempower, supported, e.g., by order intake driven by new customer acquisition. We also estimate the margin level trend to be relatively stable, even though concerns about price competition have been elevated for a few years due to slowing market growth. Higher comparison figures for the fourth quarter and lower delivery volumes due to timing weigh on the short-term outlook, the significance of which is negligible in the big picture. We raise our recommendation to Accumulate (was Reduce) and our target price to EUR 17 (was EUR 15).

Q3 showed strong order growth in new markets

The Q3 report was slightly stronger than expected in terms of the key indicator, order intake (7%/3% above our/consensus estimates). Order intake grew by 45% y-o-y driven by new markets such as Europe (excl. Nordic countries) and North America. Order intake has grown by 38% since the beginning of the year, clearly exceeding installation volumes at the market level in Europe and North America (7-8%). Revenue (41% increase) was also slightly above estimates, but profitability suffered slightly from a decrease in the gross margin. Adj. EBIT was 0.2 MEUR as expected (consensus: 1.6 MEUR) and improved by 8 MEUR y-o-y. Excluding component write-downs, the gross margin would have been around 50%, and thus the trend appears stable relative to the recent strong level. The company also stated that it aims to lower unit production costs, which could impact the margin as early as Q4. Cash flow from operating activities was 4 MEUR, and for the full year, the development has been slightly more favorable than the EBIT and our expectations.

Q4 will fall short of expectations in terms of revenue

Kempower lowered the upper end of its 2025 revenue guidance (growth estimate 10-15%, was 10-30%), which means that Q4 growth will be quite low (our estimate 2%). The earnings guidance remains unchanged and the EBIT is improving clearly (2024: -26.4 MEUR vs. 2025e: -6.7 MEUR). The cut to the revenue guidance was motivated by timing of deliveries in its currently strong order book (Q3: +17% y-o-y) that will be tilted towards 2026, and we do not find the guidance downgrade very significant for the long-term outlook. In Q4, the comparison period figures are also clearly more challenging than in Q3, both in terms of revenue and orders.

Stronger market position supports continued order growth

Kempower's new customer acquisition has been very strong recently, as evidenced by new high-profile customers such as Allego, Circle K, and EV Realty, as well as several others, which we believe already significantly support order development. Orders from existing customers are slowed by over-investment in 2022-23, but new customers acquired in 2024-25 already accounted for 40% of orders in January-September. Both the potential from new customers and the gradual recovery of old ones could support continued strong order growth in 2026-27. We made small cuts to our short-term growth estimates, but our 2030 revenue estimate rose by 5% and EBIT by as much as 15% supported by favorable order development and a solid margin outlook.

Earnings-based valuation could turn quickly

Gaining market share combined with an industry-leading margin profile indicates Kempower's strong competitiveness in a growing market. The utilization rates of Kempower's factories are still relatively low in 2025-26, but in 2027-28, earnings-based valuation multiples (EV/EBIT) already fall to attractive levels (16x and 10x). The estimate assumes that the company aims for a profitability level in line with its financial targets, so that additional growth investments are not significantly increased compared to the current trend (opex growth 2026-28e: 6–15% p.a.). The riskiness of the investment is increased by, e.g., high growth expectations, the valuation relying on long-term value creation, and the somewhat difficult predictability of the dynamics of a relatively new industry. At the moment, however, the company appears to be on its way to becoming one of the industry's major global players.