Aspo - Recent investments yield results
Aspo’s Q1 comparable EBITA improved by almost EUR 4m y/y mostly due to own actions. Earnings may not improve at quite such a rapid pace over the summer months but nevertheless continue to trend up towards next year.
Earnings improvement driven by green coasters and M&A
Aspo’s EUR 8.8m comparable EBITA beat the EUR 7.2m/7.8m Evli/cons. estimates as ESL performed better than expected despite the still challenging market. ESL saw more low activity in e.g. the forest industry, but it also adjusted its capacity down; the volume shift from loss-making time-charter agreements to high-performing green coaster vessels already drove an EBITA gain of EUR 1.4m y/y. ESL’s Q1 comparison figures were very low, but gains are likely to continue in H2 even if volume recovery may still prove somewhat slow. ESL’s short-term demand outlook remains a bit uncertain, so that Aspo’s FY’25 guidance stays wide for now, however the market outlook for Telko and Leipurin appears stable; Telko price deflation doesn’t seem imminent but rather prices now appear to mostly flatline.
Strategic investments are developing according to plan
Aspo retained guidance as there have been some positive market developments too since defense and infra spending can drive aggregates and steel demand. M&A pipeline isn’t affected by the trade war, but Aspo will likely not make that many more acquisitions in the short-term as it focuses more on organic development. Aspo also redeems its EUR 30m hybrid bond as it has found ways to replace the funding without any larger impact on growth ambitions. We make only small revisions.
FY’25 EBITA at around EUR 40m, potential to improve more
We estimate Aspo FY’25 EBITA at EUR 41m, somewhat above the guidance midpoint. The EUR 40m midpoint doesn’t seem that challenging to reach based on the strong Q1 results, but it might take Aspo until around Q3 to narrow its guidance as Q4 continues to be an important quarter especially for ESL. The relevant comparison figure for this year however will be so low that there’s bound to be at least some more improvement. Aspo’s FY’24 earnings growth proved only marginal, but this year the improvement is set to be much more significant. Aspo is valued a bit above 10x EV/EBIT on our FY’25 estimates, and the multiple should decline more over the next year or so as ESL’s volumes are recovering. The multiple is above 8x on our FY’26 estimates. We retain our EUR 6.0 TP and BUY rating.