PACT.ST — mttssn research

BUY

Conviction: MEDIUM

A restructured value-creator the market hasn't re-rated: adjusted ROIC 26.4% vs 8% WACC, EP +SEK155m, net cash even including leases, and the SEK127.6 price implies only ~1.6% perpetual growth — below the Q1 organic run-rate. The completed cost programme is flowing through (Q1 adjusted EBITA margin 9.3% vs 6.5%) with West and Central back in the black. BUY, medium conviction.

Adj. ROIC

26.4%

WACC 8% → spread +18.4pp

Economic Profit

+SEK 155M

+SEK155m at 8% WACC; still ~+130m at company's own 11%

FCF Yield

n/a

SEK311m LTM ≈ 9.5% yield on market cap

Price / Target

SEK 128 → SEK 150

+18% base; BUY

Revenue (LTM)

SEK 4.7B

LTM 4,706; Q1 organic +2.9% after −3.8% FY2025

EBIT Margin

4.5%

EBIT 4.5% reported / 6.1% adjusted; Q1 EBIT 8.1%

EV / IC

n/a

Enterprise value / invested capital

Net Debt

n/a

Net cash SEK21m incl. leases; SEK600m RCF undrawn headroom

Thesis

Proact is Europe's largest independent data-infrastructure integrator: hybrid-cloud, storage and cybersecurity services across 12 countries, anchored by ~97% repeat-customer revenue and a growing cloud/support recurring base (new cloud contracts SEK151m in Q1 alone). On mttssn-adjusted numbers it earns a 26.4% ROIC on a SEK842m capital base — EP of +SEK155m at 8% WACC, and still ~+130m at Proact's own 11% after-tax impairment-test WACC.

FY2025 was the reset year: revenue fell 3.8% organically in a soft European IT-spend market and a SEK84m cost-efficiency programme (severance 68m) crushed reported EBIT to 171m. That programme is explicitly completed, and Q1 2026 shows the turn — organic growth +2.9%, adjusted EBITA +46% to 115m (margin 9.3% vs 6.5%), EBIT margin 8.1% vs 5.1%, with the previously loss-making West and Central units back to positive adjusted EBITA.

The structural backdrop is supportive: European sovereign-cloud consumption growing >80% annually per the company's Q1 market review, data repatriation from hyperscalers to local platforms, and cybersecurity demand — all squarely Proact's niche. We rate the APM honestly: the company's Adjusted EBITA excludes all intangible amortisation (LTM 63m incl. PPA); we keep it in opex since acquired customer relationships are a recurring cost of the acquisitive model, and still get NOPAT of 222.5.

Valuation · reverse-DCF & scenarios

Capitalising adjusted NOPAT of SEK222.5m at WACC−g with a reinvestment haircut at 26.4% ROIC, and bridging through SEK21m net cash across 25.76m shares, fair value runs SEK109 (zero growth), SEK134 (2%) and SEK154 (3%) — the current EV of 3,266.6 implies only ~1.6% perpetual growth, below the Q1 organic run-rate and GDP. EV/adjusted NOPAT is 14.7x with a 9.5% LTM FCF yield.

Base SEK150 (+18%) as ~3% growth plus the restructured margin base gets priced; bull SEK185 if the 9%+ adjusted EBITA margin holds and sovereign-cloud demand compounds mid-single-digit growth; bear SEK100 if the savings are competed away and the hardware cycle turns, pushing NOPAT back toward 200m at zero growth.

Market-implied growth

-1.5%

NOPAT CAGR over 5y the EV already requires

No-growth value / share

SEK 134

105% of price; rest = priced-in growth

ROIC − WACC

+18.4 pp

ROIC 26.4% vs WACC 8.0% — positive = value creation

CAP (priced-in)

n/a

years of excess returns the price implies (fades to WACC)

The market pays today’s enterprise value for roughly -1.5% NOPAT growth over 5 years. The business earns 26% on capital against a 8% cost of capital (spread +18.4 pp); the no-growth value is SEK 134/share (105% of price), so the rest is priced-in growth.

Scenario	24m target	Impl. g	Upside	Prob.	Driver
Bull	SEK 185	+9%	+45%	30%	9%+ adj EBITA margin holds; sovereign-cloud demand compounds growth
Base	SEK 150	+3%	+18%	45%	~3% growth on the restructured margin base gets priced
Bear	SEK 100	-9%	-22%	25%	Savings competed away; hardware down-cycle drags NOPAT to ~200m
Prob-weighted	SEK 148	—	+16%	100%	Scenario-weighted expected value

Sensitivity — fair value / share at WACC × growth

WACC \ g	0%	3%	5%	8%	10%	15%
6.50%	183	205	221	247	266	319
7.25%	155	173	185	206	221	263
8.00% (base)	134	149	160	177	189	223
8.75%	119	131	140	154	164	193
9.50%	107	117	125	137	145	169

Green = fair value above the current price of SEK 127.60. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.

Method & data. NOPAT SEK 222, invested capital and ROIC 26.4% are observed (adjustments.json); WACC 8.0% and terminal g 2.5% are assumptions. EV→equity uses net debt SEK -21. The model holds ROIC constant (no fade) over the explicit horizon; the CAP figure instead fades excess returns to WACC.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Cost programme flow-through

Completed SEK84m one-cycle restructuring lifts the margin base — Q1 adjusted EBITA margin 9.3% vs 6.5%, with West and Central back in the black.

2. Above-WACC returns

Adjusted ROIC 26.4% vs 8% WACC; EP positive even at the company's own 11% impairment-test WACC — genuine value creation.

3. Sovereign-cloud tailwind

European sovereign-cloud consumption growing >80%/yr and data repatriation from hyperscalers play directly to Proact's local hybrid-cloud niche.

4. Per-share accretion

Buybacks 118m FY2025 + 52m Q1 plus 64m dividend; shares down 5.7% yoy — compounding value per share at 26% ROIC.

5. Recurring revenue base

~97% repeat-customer revenue and growing cloud/support contracts (Q1 new cloud volume SEK151m) underpin visibility.

Key risks

Hardware-cycle exposureSystem sales are cyclical and FY2025 organic revenue fell 3.8%; DRAM/memory prices nearly doubled in Q1 — cost pass-through and delayed purchases are live risks.
Restructuring savings durabilityThe base case assumes the 79m IAC add-back is truly one-cycle; competitive pricing in a volatile market could re-absorb the savings.
Goodwill-heavy balance sheetGoodwill SEK1,311m is 121% of equity from the acquisitive model; tests pass at 11-11.3% WACC today, but a demand downturn compresses headroom.
Acquisition integrationBlakYaks/Consular added 358.6m goodwill with 107.7m contingent consideration outstanding — earn-out and integration risk in the UK/DK units.
Tax normalization gapLTM effective tax rate of 11.6% flatters reported net income; our 23% normalized NOPAT is the honest earnings base — reported EPS will look better than sustainable power.

Conclusion

Proact pairs a 26.4% adjusted ROIC and net-cash balance sheet with a price that implies ~1.6% perpetual growth — just as the completed cost programme and a Q1 momentum turn (organic +2.9%, adjusted EBITA +46%) raise the earnings base. BUY, medium conviction; base target SEK150 (+18%).

Conviction is capped at medium by the hardware-resale cyclicality and the single-quarter evidence for the margin reset; two more quarters of 8%+ EBITA margins and continued organic growth would support an upgrade.

Footnote evidence & sources

Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open

Adjustment / figure	Value	Source	Why mttssn treats it this way
Revenue LTM (rolling 12 months)	4,706	Consolidated statement of comprehensive income, Rolling 12 months 📄 p.19	LTM revenue read directly from Proact's own rolling-12 column (Apr 2025 - Mar 2026).
Operating profit (EBIT) LTM, reported	210	Consolidated statement of comprehensive income, Rolling 12 months 📄 p.19	Reported LTM EBIT before mttssn normalization; includes -79 items affecting comparability.
Items affecting comparability add-back (LTM)	79	Derivation of key ratios: Adjusted EBITA 352 - EBITA 273 📄 p.25	Completed group-wide cost-efficiency programme (FY: -78.7 incl. severance 68.0) + IFRS 3 acquisition costs; one-cycle restructuring, normalized out of NOPAT.
IAC composition FY2025	-84	Note 13 Items affecting comparability 📄 p.95	FY split: cost savings programme -78.7 (severance 68.0) and acquisition costs -5.3 — confirms the add-back is restructuring/transaction, not operating.
Company APM: Adjusted EBITA LTM	352	Derivation of key ratios, Rolling 12 months 📄 p.25	Company headline APM excludes all intangible amortisation (63 LTM incl. PPA) — mttssn rejects that add-back and bridges at EBIT level: 352 - 63 = 289 vs ours 210 + 79 = 289.
PPA amortisation kept in opex (FY portion)	52.7	Note 15 Intangible fixed assets: amortisation of customer relationships and brands 📄 p.97	Acquired customer relationships/brands amortisation is a recurring cost of Proact's acquisitive model — not added back.
Total equity	1,080	Consolidated report of financial position, 31 Mar 2026 📄 p.20	Q1 2026 snapshot equity; no non-controlling interests.
Accumulated OCI stripped from equity	52	Statement of changes in equity: translation reserve 35 + net investment reserve 17 at 2026-03-31 📄 p.21	FX translation and net-investment-hedge marks are not operating capital decisions; stripped so IC reflects deployed capital.
Interest-bearing debt excl. finance leases	219	Derivation of key ratios, net debt: liabilities to credit institutions excl. financial leasing 📄 p.26	Bank debt after Feb 2026 refinancing into a SEK 600m revolving facility; leases (259) tracked separately and kept out of IC.
Cash and cash equivalents	499	Consolidated report of financial position, 31 Mar 2026 📄 p.20	Excess cash above 2% of LTM revenue (404.9) removed from IC.
Goodwill	1,311	Consolidated report of financial position, 31 Mar 2026 📄 p.20	Goodwill is 121% of equity — acquisitive profile; FY2025 impairment tests clean at after-tax WACC 11.0-11.3% for all CGUs.
Goodwill by CGU + impairment-test WACC	1,296	Note 15 cont.: goodwill by cash-generating unit, WACC after tax 11.0-11.3%, terminal growth 2% 📄 p.98	No impairment need at 31 Dec 2025; sensitivity (+2pp WACC, -1pp growth) still passes — no post-tax add-back.
Pension: defined contribution only	0	Note 9: all group companies offer defined contribution pension plans only 📄 p.92	No DBO/plan-asset net liability — pension leg of IC is zero.
Tax expense LTM (effective 11.6%)	20	Consolidated statement of comprehensive income, Rolling 12 months 📄 p.19	LTM effective rate depressed by deferred-tax movements; NOPAT taxed at normalized 23% blended European statutory instead (conservative).

Quality · Buffett tenets11 / 15

Understandable business●●○

30+ year Nordic/European data-infrastructure integrator; ~97% of 2025 revenue from repeat customers and a visible cloud/support recurring core — but a hardware-resale leg keeps the model cyclical.

Durable moat●●○

Switching costs in managed hybrid-cloud services: mission-critical infrastructure, top-10 customers only 22% of revenue, no single customer >4%; moat is real but the integrator market stays competitive.

Management & capital allocation●●○

One-cycle cost programme completed (IAC 84m, severance 68m) not serial restructuring; disciplined bolt-ons (BlakYaks at 33.8% adj EBITA margin); shares down 5.7% yoy via buybacks at 26% ROIC — offset by goodwill at 121% of equity.

Financial strength & returns●●●

Adjusted ROIC 26.4% vs 8% WACC, EP +SEK155m — still ~+130m at the company's own 11% impairment-test WACC; net cash SEK21m even including lease liabilities; LTM FCF SEK311m.

Valuation margin of safety●●○

EV 3,266.6 implies only ~1.6% perpetual NOPAT growth vs +2.9% Q1 organic; capitalised-NOPAT fair value SEK134-154 at 2-3% growth vs price 127.6 — a modest but genuine margin.