Aspo - ESL earnings recover from here
Aspo reports Q3 results on Nov 3. In our view the midpoint of FY’25 comparable EBITA guidance remains relevant, however much still depends on ESL’s H2 performance.
ESL should improve in H2 after a flat y/y H1 performance
Telko delivered most of the Aspo H1’25 y/y EBITA gains; this was largely due to the low comparison figures, which were burdened by M&A costs. Telko now faces a lot higher H2 comparison figures, but we believe it should still be able to improve a bit going forward and especially next year as European industrial activity could pick up more. Aspo’s FY’25 comparable EBITA guidance midpoint of EUR 40m implies the H2’25 figure should improve by some EUR 5m y/y, and we believe this gain to be driven by ESL as its comparison figures were still disappointingly low. ESL’s dry bulk market is only stabilizing now, but it has already received most of the new green coasters and is therefore positioned to see improving performance even if the demand environment remains challenging particularly within the forest industry.
Q4 should see even more significant ESL EBITA gains
Q2 sounded caution on ESL’s short-term outlook, so Q3 could remain a bit soft. Q4 has historically been by far the strongest quarter for ESL, and we believe ESL’s Q4’25 EBITA could gain more than EUR 3m y/y due to the disappointingly low comparison figure, the recovery in demand which might soon pick up some more pace as well as the additional green coasters ESL has since received. We estimate ESL and Telko to see each their FY’25 EBITA improve by some EUR 5m; we hence estimate Aspo FY’25 EBITA at EUR 39.6m, basically at the midpoint. ESL just recently sold one of its older larger vessels for EUR 18m, which strengthens balance sheet for the coming green handy vessel investments but also means there’s a limit to earnings recovery pace now that some capacity has been taken out.
Upside potential remains based on peer multiples
In our view ESL’s EBITA continues to recover next year since demand is only stabilizing now, and the EBITA gain pace then could be roughly similar as H1’25 especially still sets low comparison figures. Telko EBITA is unlikely to gain that much next year, but we estimate another EUR 2m improvement. Aspo could then see the two contribute at least EUR 5m more to FY’26 EBITA. Aspo is valued a bit below 13x EV/EBIT on our FY’25 estimates, but we find SOTP points to a value of some EUR 7 per share. Our new TP is then EUR 7.0 (6.4) as we retain BUY rating.