Aspo - Earnings grow, multiples yet low
Aspo reports Q4 results on Feb 16. ESL should see more significant earnings gains from now on as outlook has at least stabilized, while Telko’s EBITA could gain by another EUR 2m.
ESL’s performance mostly determines earnings gains pace
Telko already saw significant earnings gains over last year, especially due to acquisitions but also thanks to higher sales margins driven by product mix, while ESL still didn’t enjoy any meaningfully better industrial demand environment at least before Q4’25. Q4 is often clearly the strongest quarter for ESL, and while recent reports by the likes of SSAB and UPM signal cargo demand should have already bottomed out ESL’s current EBITA run-rate remains the one major source of uncertainty. We estimate ESL’s Q4 EBITA to have gained EUR 2.7m y/y from the very soft comparison figure so that Aspo’s EUR 39.7m FY’25 EBITA would land just below the guidance midpoint.
Together ESL and Telko may contribute EUR 6m higher EBITA
Aspo’s short-term earnings gains outlook is now mostly driven by ESL as its roughly EUR 20m FY’25 EBITA, according to our estimates, is still low relative to potential. ESL has undemanding comparison figures for FY’26 as well, although we note Q1’26 seems shaping up to be operationally challenging from the perspective of winter conditions; we believe the ice situation could hurt ESL Q1 EBITA by roughly EUR 0.5m or so. More depends on the recovery of steel and forest industry demand, and although we believe ESL FY’26 EBITA will remain well short of potential we expect it to improve by some EUR 4-5m. Meanwhile we estimate Telko FY’26 EBITA to gain by about EUR 2m y/y, which would imply 6.6% margin (up 30bps y/y). Leipurin divestment should be completed soon, which will help Aspo group costs down by some amount. We estimate ESL and Telko combined FY’25 EBITA at EUR 38m and see it up to EUR 44m in FY’26. Earnings should then have more room to gain also in FY’27 especially since ESL’s outlook has basically only now stabilized.
Peer group earnings multiples imply more upside potential
ESL and Telko peer group earnings multiples gained around 10-20% over the past few months, implying some EUR 275m EV for ESL and EUR 215m for Telko. Aspo’s FY’26 EBITA will not be directly comparable to previous years due to the divestment of Leipurin and the adjustments in group costs, but our SOTP valuation shows equity value per share could be at least EUR 8.5. Our new TP is EUR 8.5 (7.1); our rating is now BUY (ACCUMULATE).