Aspo - ESL should improve a lot this year
Aspo has EBITA improvement potential also this year as Telko and lower group costs contribute, but a lot depends on ESL.
ESL’s EBITA didn’t improve yet
Aspo’s EUR 8.9m comparable EBITA came in below the EUR 12.1m/9.7m Evli/cons. estimates as ESL especially still faced many challenges including lackluster forest industry demand as well as more acute issues such as customer production outages and severe storms. Telko’s EUR 4.4m comparable EBITA also landed a bit below our EUR 4.8m estimate, but Telko’s margin was still a decent 6.5%. Telko could continue to grow organically thanks to relatively stable volume and pricing outlook, while completed as well as future M&A are to yield more synergies. We estimate Telko to grow 5% this year on an organic basis, which with the additional improvement in margins would lead Telko close to an EBITA of EUR 20m.
ESL should see meaningful earnings gains this year
Telko is likely to see more EBITA gains in the short-term, organically and inorganically, while ESL’s earnings recovery is yet to start as FY’25 was lower than the previous one in terms of EBITA. ESL’s minority stake transaction valued it at EUR 300m a few years ago; in our view the price likely reflected expectations that EBITA would gain to around EUR 25m at least by now, which would have implied a forward-looking multiple of 12x. On that valuation the FY’25 actual multiple would have still however been 18x. This is arguably not a big premium since ESL peer group median FY’25 EV/EBIT was 17x, but the FY’26-27 medians are already down to around 10x. We revise our ESL estimates down, but our FY’26 EBITA estimate of EUR 23.5m implies a gain of EUR 7m y/y. In that case Aspo’s FY’26 comparable EBITA would gain by almost EUR 10m y/y to EUR 39m. Aspo has many drivers this year as Telko can improve more and group costs come down, but much also depends on the recovery pace of ESL.
Valuation sensitive to ESL earnings and multiples assumption
ESL might still achieve EUR 300m valuation, but currently peer multiples indicate its EV some 10-15% below that. Most relevant Telko peers trade around 12x EV/EBIT, and Telko might be valued at least slightly above EUR 200m. Peer multiples thus imply some EUR 8 per share Aspo equity value. Our new TP is EUR 8.2 (8.5); our rating is now ACCUMULATE (BUY).