HAKI Safety AB (publ) (HAKI-B.ST) Investment Analysis

1. Executive Summary

The Strategic Metamorphosis: From Conglomerate to Industrial Specialist

HAKI Safety AB (publ), listed on the Nasdaq Stockholm Small Cap under the ticker HAKI-B, presents a compelling case study in corporate transformation and strategic refocusing. As of late 2025, the company stands at a critical inflection point, having largely completed its metamorphosis from Midway Holding—a diversified conglomerate with a disparate portfolio of unrelated assets—into a focused industrial group dedicated to safety products and solutions for temporary workplaces. This transition is not merely cosmetic; it represents a fundamental shift in capital allocation philosophy, operational structure, and long-term value creation drivers. The rebranding to HAKI Safety serves as a definitive signal to the market that the company’s future is inextricably linked to the legacy strength of its core HAKI scaffolding brand and the broader, secular growth trends inherent in industrial safety and regulatory compliance.

The company’s operations are now streamlined into three distinct business areas: Scaffolding Systems, Work Zone Safety, and Digital Solutions. This segmentation reflects a sophisticated understanding of the value chain in construction and industrial maintenance. By moving beyond the commoditized sale of steel scaffolding components into higher value-added services such as digital surveying (Geodesy), complex temporary access planning, and proprietary safety devices (e.g., catch fans and barrier systems), HAKI Safety is attempting to insulate itself from the notorious cyclicality of the construction sector. The overarching strategic ambition is to own the "safety ecosystem" of a worksite, creating a sticky, interconnected web of products and services that enhances customer retention and drives recurring revenue.

Operational Resilience in a Challenging Macro Environment

The fiscal period spanning 2024 through the third quarter of 2025 has served as a rigorous stress test for this new strategic direction. The macroeconomic backdrop has been undeniably hostile, characterized by a precipitous decline in European residential construction activity, elevated interest rates, and inflationary pressures on input costs. Despite these headwinds, HAKI Safety has demonstrated a degree of operational resilience that validates the defensive characteristics of its portfolio.

In the third quarter of 2025, the company reported net sales of SEK 288 million, marking a 14% increase compared to the same period in the previous year. While a significant portion of this growth was inorganic—driven by the acquisition of Trimtec and Semmco—the company achieved positive organic growth of 2% in a contracting market, suggesting market share gains and the successful execution of cross-selling strategies. Crucially, the gross margin expanded to 37.2%, up from 34.4% in Q3 2024, indicating that the shift toward higher-margin niches and the integration of recent acquisitions are beginning to yield tangible financial benefits.

The 2027 Financial Targets and Capital Structure

Management, led by President and CEO Sverker Lindberg, has anchored its medium-term strategy to a set of aggressive financial targets to be achieved by 2027. The central pillar of this plan is to double net sales to SEK 2,000 million (2 billion), effectively doubling the size of the company from its 2024 baseline of approximately SEK 1 billion. This growth is to be achieved through a balanced combination of organic expansion—projected at 5-7% annually—and a continued, disciplined M&A program targeting complementary safety businesses. Furthermore, the group aims to sustain an adjusted EBITA margin exceeding 10%, a threshold that implies a permanent shift in the quality of earnings.

To support this growth trajectory and deleverage the balance sheet following the acquisition of Trimtec, HAKI Safety successfully concluded a rights issue in September 2025, raising approximately SEK 50 million. The issue was oversubscribed at 104.3%, a strong vote of confidence from the shareholder base, which includes significant insider participation from the Board and executive management. This recapitalization has strengthened the company's financial position, repaying bridge loans and providing the liquidity headroom necessary to navigate the current economic uncertainty while remaining opportunistic on the M&A front.

Investment Proposition Summary

The investment thesis for HAKI Safety hinges on the market’s recognition of its transition from a cyclical construction supplier to a compounding industrial safety group. Currently trading at a valuation that reflects peak cycle pessimism—approximately 15x trailing earnings and significantly below the multiples of successful Nordic serial acquirers like Lifco or Lagercrantz—the stock offers an asymmetric risk-reward profile. If management can deliver on the 2027 targets, the potential for multiple re-rating combined with earnings growth is substantial. However, risks remain elevated, particularly regarding the timing of the European construction recovery and the execution of the integration strategy for acquired entities. This report provides an exhaustive examination of these factors to determine whether HAKI Safety is a "value trap" or a "hidden champion" in the making.

2. Business Drivers & Strategic Overview

2.1. The Three Strategic Pillars of Revenue Generation

HAKI Safety’s business model has evolved from a singular focus on scaffolding into a triad of complementary segments. Understanding the distinct revenue drivers and competitive dynamics of each is essential for evaluating the quality of the group's earnings.

2.1.1. Scaffolding Systems: The Legacy Engine

Product Portfolio: This segment encompasses the development and sale of the "HAKI Universal" system, a modular scaffolding solution known for its versatility and speed of assembly. Unlike traditional "tube and fitting" scaffolding, which is labor-intensive and requires skilled scaffolding labor, HAKI’s system utilizes a unique hook-on locking mechanism that allows for faster erection and dismantling times—a critical cost-saving factor in high-wage economies like Sweden and the UK. The portfolio also includes HAKI Bridge Systems (HBS) and HAKI Weather Protection, specialized solutions for infrastructure and climate-sensitive projects.

Revenue Mechanics: Revenue is generated through a mix of direct sales to large rental companies and scaffolding contractors, and the company's own rental operations. The rental model provides a degree of counter-cyclicality; during economic downturns, customers often prefer to rent equipment to preserve capital, whereas in boom times, they invest in their own inventory.

Competitive Advantage: The competitive moat in this segment is technical and entrenched. The HAKI system is not interoperable with competitor systems like Layher Allround or Peri Up. Once a contractor invests in the HAKI ecosystem, the switching costs are prohibitively high due to the incompatibility of inventory and the need to retrain staff. Furthermore, HAKI’s engineering support services, which assist clients in designing complex temporary structures for industrial maintenance or difficult terrain, foster deep customer loyalty.

2.1.2. Work Zone Safety: The High-Growth Vertical

Strategic Rationale: This segment represents the company’s strategic expansion into broader industrial safety. It was significantly bolstered by the acquisitions of Vertemax (now integrated as HAKI) and Semmco.

Key Products & Drivers:

• Edge Protection & Catch Fans: In dense urban environments, regulations mandate rigorous protection against falling debris. HAKI’s catch fans are market-leading solutions often specified in project tenders in London and major Nordic cities. This demand is driven by regulatory compliance rather than economic discretion.

• Aviation & Rail Access (Semmco): The acquisition of Semmco provided entry into the aviation and rail sectors. Semmco manufactures height-adjustable access platforms for aircraft maintenance (ground support equipment) and train depot maintenance. This diversification is critical as it decouples revenue from the construction cycle. Aircraft maintenance schedules are mandated by aviation authorities and are largely independent of interest rates or housing starts.

• Synergies: There is a powerful cross-selling logic. A construction site utilizing HAKI scaffolding for the facade is a prime candidate for HAKI barrier systems on the perimeter and stair towers for internal access.

2.1.3. Digital Solutions: The "Geodesy" Recurring Revenue Model

Overview: The most recent addition to the strategic triad is Digital Solutions, significantly expanded by the Q1 2025 acquisition of Trimtec. This segment focuses on "Geodesy"—the science of accurate measurement and surveying.

Operational Model: HAKI Safety, through its subsidiaries Norgeodesi and Trimtec, acts as a distributor for Trimble, a global leader in precision technology. They sell and rent advanced surveying instruments (total stations, 3D laser scanners) to surveyors, civil engineers, and construction firms.

• Recurring Revenue: Crucially, this business model includes a significant service component. The precision instruments require regular calibration, maintenance, and software updates, generating high-margin recurring revenue streams that are distinct from hardware sales.

• Strategic Value: By supplying the surveying equipment at the very inception of a project—often before ground is broken—HAKI Safety establishes an early relationship with the project management team. This "early look" provides a strategic advantage in bidding for the subsequent scaffolding and safety requirements as the project progresses to the construction phase.

2.2. Growth Initiatives: The Path to SEK 2 Billion

The roadmap to doubling sales by 2027 is predicated on two synchronized engines of growth.

1. Organic Growth through Market Penetration:

• North American Expansion: HAKI has identified North America as a key growth market. By leveraging its relationships with global industrial customers (e.g., in the energy sector), the company aims to introduce its premium systems to a market still heavily reliant on older, less efficient scaffolding technologies.

• Innovation: The launch of updated digital planning tools (HAKI BIM/SIM) allows customers to visualize projects in 3D, calculate load-bearing requirements automatically, and generate accurate bills of materials. This digital stickiness encourages customers to commit to the HAKI ecosystem.

2. The M&A "Roll-Up" Strategy:

• Target Profile: HAKI Safety actively seeks acquisition targets with sales between SEK 50-150 million. The ideal target is a niche safety product manufacturer or distributor that can benefit from HAKI’s international distribution network.

• Execution History: The acquisition of Trimtec in 2025 serves as a template. Acquired for SEK 50 million upfront with a structured earn-out, the deal was valued at approximately 5x EBITDA (post-synergies), showcasing a disciplined approach to valuation. The company aims to complete 1-2 such acquisitions annually.

2.3. Competitive Landscape Analysis

HAKI Safety operates in a polarized market structure.

• Global Generalists (The Goliaths): Companies like Layher (Germany) and Peri (Germany) dominate the global volume for scaffolding. They benefit from massive economies of scale in manufacturing. HAKI does not compete on price against these giants for standard residential scaffolding. Instead, HAKI competes on complexity. For difficult projects—such as suspending scaffolding from a bridge or creating a temporary roof over a heritage building—HAKI’s engineering support and versatile system offer a lower total cost of ownership due to labor savings.

• Local Specialists: In the UK and Scandinavia, HAKI faces competition from smaller, local fabricators. Against these players, HAKI leverages its balance sheet, digital tools, and comprehensive safety certifications to win contracts with Tier-1 construction firms that require rigorous supply chain validation.

• Digital Competitors: In the digital space, distributing Trimble products places HAKI in competition with distributors of Leica Geosystems (Hexagon) and Topcon. Success here depends on the quality of local support and training provided to surveyors, an area where Trimtec and Norgeodesi have established strong reputations.

3. Financial Performance & Valuation

3.1. Detailed Financial Review: 2024-2025

The financial performance of HAKI Safety over the past 18 months reveals a company successfully navigating a transformational period despite external pressures.

Table 1: Consolidated Income Statement Highlights (SEK Millions) Source:

Income Statement Analysis:

• Revenue Quality: The 14% top-line growth in Q3 2025 was primarily driven by the acquisitions of Trimtec and Semmco. However, the organic growth of 2% is a standout metric given the broader contraction in the construction sector. This organic resilience suggests that the underlying demand for HAKI’s core safety products remains robust even when new build volumes are low.

• Gross Margin Expansion: The jump in gross margin to 37.2% in Q3 2025 is a critical indicator. It reflects a favorable shift in product mix—likely due to higher-margin contributions from the newly acquired Digital Solutions and Work Zone Safety segments, alongside supply chain efficiencies. This reverses the trend seen in Q2 2025, where margins were pressured by product mix issues.

• EBITA Volatility: The year-to-date decline in Adjusted EBITA margin (5.7% vs 6.9%) highlights the operational friction encountered in the first half of 2025. Costs associated with restructuring the business into three new areas and integrating acquisitions weighed on profitability. However, the Q3 rebound to 8.3% suggests that these integration costs are normalizing, and the company is moving back toward its >10% target.

• Earnout Revaluation: A notable item in Q3 2025 was a positive net effect of SEK 9 million related to the revaluation of earnouts. While this boosts reported Operating Profit and Net Profit, investors should view this as a non-cash, non-recurring accounting adjustment rather than core operational earnings. It implies that the future payouts for acquisitions might be lower than initially estimated, which preserves cash but could signal that the acquired entities are performing slightly below their maximum growth targets.

3.2. Balance Sheet and Liquidity Profile

The capital structure has been a focal point for investors, given the leverage taken on to fund the acquisition spree.

Table 2: Net Debt and Liquidity (SEK Millions) Source:

Liquidity Analysis:

• The 2025 Rights Issue: In September 2025, HAKI Safety executed a rights issue raising ~50 MSEK to repay the bridge loan facility used for the Trimtec acquisition. The issue was oversubscribed, a bullish signal for market sentiment. This strategic move immediately improved the debt profile, reducing interest rate risk and extending the maturity profile of the debt.

• Leverage Ratios: The company’s target for Net Financial Debt / Adjusted EBITDA is <2.5x. In 2024, this ratio touched 2.8x due to the Semmco acquisition. Following the rights issue and the repayment of the bridge loan, the leverage profile has stabilized, though it remains a key metric to watch. The IFRS 16 lease liabilities (approx. SEK 148M difference between Financial and Total Net Debt) are significant, reflecting the company's asset-light approach to facilities and vehicle fleets.

• Cash Flow Dynamics: Operating cash flow in Q3 2025 was SEK 1 million, recovering from negative SEK -15 million in Q3 2024. While positive, this is relatively low, likely due to working capital movements associated with the revenue growth. Sustained conversion of EBITDA to Free Cash Flow will be essential to fund the dividend and future M&A without further dilution.

3.3. Valuation Multiples and Market Perspective

HAKI Safety trades as a micro-cap with a specific valuation discount relative to larger industrial peers.

Current Valuation Inputs (TTM as of Q3 2025):

• Share Price: SEK 20.90.

• Shares Outstanding: ~29.8 million.

• Market Capitalization: ~SEK 623 million.

• Enterprise Value (EV): ~SEK 1,148 million (Market Cap + Total Net Debt 525).

• LTM Adjusted EBITA: SEK 75 million.

• LTM EPS: ~SEK 0.97 (YTD) + Q4 est. -> ~SEK 1.39.

Valuation Ratios:

• EV/EBITA: ~15.3x.

• P/E Ratio: ~15.0x.

• P/B Ratio: ~0.9x.

Comparative Analysis: When compared to Nordic serial acquirers (e.g., Lifco, Indutrade) which often trade at 20-25x EBITA, HAKI Safety trades at a significant discount. This discount reflects:

1. Size Liquidity Risk: The micro-cap status limits institutional ownership.

2. Sector Exposure: The market still perceives HAKI as a construction play rather than a diversified industrial group.

3. Track Record: The "New HAKI" strategy is still proving itself, whereas peers have decades of compounding history.

However, compared to pure-play construction suppliers which might trade at 8-10x P/E due to cyclical fears, HAKI commands a premium. This suggests the market is beginning to price in the higher quality of its safety-focused revenue streams.

4. Risk Assessment & Macroeconomic Considerations

4.1. Macroeconomic Exposure: The Construction Cycle

The most potent risk factor facing HAKI Safety is the health of the European construction industry.

• Residential Downturn: The residential construction market in Europe, particularly in Germany and Sweden, is in a severe contraction. High interest rates have crushed affordability, and developers are pausing projects. Forecasts from the ifo Institute suggest that residential completions in Germany could fall by another 15% in 2026 before stabilizing. This directly impacts the demand for standard scaffolding systems.

• Geographic Divergence: The risk is not uniform. The UK market shows signs of stabilizing earlier, while the Nordics are lagging. HAKI’s exposure to Norway (via Norgeodesi) has been a buffer, as the Norwegian infrastructure sector remains robust due to sovereign wealth funding.

• Mitigation via Infrastructure: The "Civil Engineering" sector in Europe is projected to grow, driven by government spending on energy transition and transport infrastructure. HAKI’s specialized bridge systems and tunnel solutions position it to capture this spend, hedging the residential decline.

4.2. Operational Risks: M&A Integration

HAKI Safety is executing a "roll-up" strategy, which carries inherent execution risks.

• Integration Friction: Merging diverse corporate cultures—a Swedish scaffolding firm, a UK aviation manufacturer (Semmco), and a digital instrument distributor (Trimtec)—is complex. The "unfavourable product mix" cited in Q2 2025 serves as a warning that integration can temporarily disrupt margins. Failure to integrate IT systems or sales teams could lead to cost bloat and missed synergy targets.

• Key Personnel Risk: In small acquisitions like Trimtec, the value often resides in the founders and key sales staff. Retention of these individuals post-earnout is critical. The revaluation of earnouts in Q3 2025 might indicate that some performance targets were missed, which could potentially demotivate acquired management teams if not handled carefully.

4.3. Financial Risks: Interest Rates and Covenants

• Cost of Debt: With over SEK 500 million in net debt, HAKI is sensitive to interest rates. While the rights issue reduced the immediate burden, a "higher for longer" rate environment will continue to suppress Net Profit margins due to interest expense.

• Covenant Headroom: The company operates with a covenant ceiling of 2.5x Net Debt/EBITDA. In 2024, this was breached (2.8x). While currently compliant following the rights issue, any significant earnings miss could rapidly erode covenant headroom, potentially forcing further equity dilution or asset sales.

4.4. Currency Risk (Translation and Transaction)

HAKI reports in Swedish Krona (SEK) but generates significant revenue in GBP (UK), NOK (Norway), and EUR (Europe).

• Translation Risk: A strengthening SEK reduces the reported value of foreign earnings. In Q3 2025, currency headwinds shaved 3% off the top-line growth.

• Transaction Risk: The company manufactures in Hungary and Poland but sells in UK/Nordics. Mismatches between cost currency (EUR/PLN) and revenue currency (GBP/SEK/NOK) can impact gross margins if hedging strategies are ineffective.

5. 5-Year Scenario Analysis

This section projects the potential shareholder returns through 2030 based on three distinct scenarios. The modeling assumes the current share count of ~29.8 million remains constant (no further major dilution), and focuses on the execution of the 2027 strategic targets as the primary valuation driver.

5.1. Methodology & Assumptions

• Base Year: 2025 (Projected Full Year based on Q3 YTD run-rate).

• Valuation Methodology: Target EV/EBITDA and P/E multiples applied to 2030 forecasted metrics.

• Discount Rate: Not explicitly used for price targeting, but implicit in the multiple selection (higher risk = lower multiple).

5.2. Scenario 1: The "Industrial Compounder" (High Case)

Narrative: HAKI Safety successfully executes its strategy. The construction market rebounds robustly in 2026/2027. The company achieves its SEK 2 billion sales target by 2028. The integration of Semmco and Trimtec creates a "flywheel" effect where digital sales drive scaffolding rentals. Margins expand structurally due to the shift toward proprietary safety products and services.

Key Fundamentals:

• Revenue Growth: 12% CAGR (5% Organic + 7% M&A).

• 2030 Revenue: SEK 2,200 Million.

• EBITA Margin: 11.5% (Exceeding the >10% target due to scale and mix).

• 2030 Adjusted EBITA: SEK 253 Million.

• Net Margin: 8.5% (Deleveraging reduces interest costs).

• 2030 EPS: ~6.30 SEK.

Valuation: The market re-rates HAKI as a high-quality serial acquirer, awarding it a P/E of 18x. Share Price 2030: 113 SEK.

5.3. Scenario 2: The "Steady Recovery" (Base Case)

Narrative: A "muddle through" scenario. The construction market recovers slowly. HAKI grows but misses the aggressive 2027 timeline, hitting the SEK 2 billion mark closer to 2030. Margins improve to the target level but struggle to exceed it due to persistent competitive pressure from Layher and Peri.

Key Fundamentals:

• Revenue Growth: 8% CAGR (3% Organic + 5% M&A).

• 2030 Revenue: SEK 1,700 Million.

• EBITA Margin: 9.5% (Approaching but not holding >10%).

• 2030 Adjusted EBITA: SEK 161 Million.

• Net Margin: 6.5%.

• 2030 EPS: ~3.70 SEK.

Valuation: HAKI trades at its historical average multiple for a small-cap industrial, a P/E of 14x. Share Price 2030: 52 SEK.

5.4. Scenario 3: The "Value Trap" (Low Case)

Narrative: The European construction market stagnates (secular decline). Integration of acquisitions fails to yield synergies, resulting in cost bloat. The digital division loses market share to tech giants. Debt servicing constrains further M&A.

Key Fundamentals:

• Revenue Growth: 2% CAGR (Stagnation; inflation-only growth).

• 2030 Revenue: SEK 1,150 Million.

• EBITA Margin: 6.0% (Loss of operating leverage; fixed costs bite).

• 2030 Adjusted EBITA: SEK 69 Million.

• Net Margin: 3.0% (Interest costs consume profit).

• 2030 EPS: ~1.15 SEK.

Valuation: The market prices HAKI as a distressed cyclical asset. P/E contracts to 10x. Share Price 2030: 11.50 SEK.

5.5. Share Price Trajectory & Weighted Outcome

Table 3: 5-Year Scenario Projections

Total return calculated from current price of SEK 20.90. Excludes dividends.

Scenario Summary: ASYMMETRIC UPSIDE POTENTIAL

6. Qualitative Scorecard

This scorecard assesses HAKI Safety’s qualitative attributes to contextualize the quantitative valuation.

Table 4: Qualitative Investment Scorecard

Overall Blended Score: 6.9 / 10

Scorecard Summary: SOLID TRANSFORMATION PLAY

7. Conclusion & Investment Thesis

HAKI Safety AB (publ) presents a classic "special situation" in the Nordic micro-cap space. The market currently prices the company primarily through the lens of its legacy exposure to the depressed residential construction market, resulting in a valuation (15x P/E) that ignores the structural transformation underway.

The Investment Thesis:

1. Regulatory Moat: HAKI Safety is pivoting to sell "compliance." As safety regulations tighten globally, demand for their proprietary systems (catch fans, advanced guardrails) becomes decoupled from the economic cycle.

2. M&A Arbitrage: The company is effectively a platform for consolidating the fragmented safety market. By acquiring private firms at 4-6x EBITDA and integrating them into a public entity that should trade at 12-15x, management is creating shareholder value through multiple arbitrage and operational synergies.

3. Insider Conviction: The heavy insider buying and oversubscribed rights issue in 2025 are strong signals that those closest to the business believe the intrinsic value is significantly higher than the current share price of ~21 SEK.

4. Cyclical Option: Buying a cyclical-exposed industrial at the bottom of the cycle (2025) historically generates alpha. Even a modest recovery in European construction volumes in 2026/2027 will provide significant operating leverage, boosting earnings disproportionately.

Risks to Monitor: The primary risk is a prolonged stagnation in the European economy ("Japanification") which would stifle organic growth and strain the balance sheet. Additionally, the execution risk of integrating three diverse business areas cannot be discounted.

Conclusion: HAKI Safety is a high-quality transformation story trading at a cyclical discount. For the patient investor willing to look past the near-term macro noise, the potential for a double in share price over the next 5 years is realistic.

Thesis Summary: BUY THE TRANSFORMATION

8. Technical Analysis, Price Action & Short-Term Outlook

HAKI-B.ST is currently trading in a consolidation phase around SEK 20.90, hovering just below its 200-day moving average (DMA) of approximately SEK 21.40. The price action has been capped by the recent rights issue, which created a temporary supply overhang, but the successful absorption of these shares establishes a solid support level at SEK 20.00. Momentum indicators are neutral, suggesting selling exhaustion. A sustained close above the SEK 21.50 resistance level would technically confirm a trend reversal and likely attract momentum traders targeting the SEK 24-25 range.

Short-Term Outlook: COILING FOR BREAKOUT