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• Haobo focuses on X-ray flat panel detectors, offering a-Si, IGZO, and CMOS technologies. With the acquisition, DT taps into TFT flat panel (a-Si & IGZO) markets which almost doubles DT’s addressable market size to EUR 3.1bn (2025). The main application for TFT flat panels is in medical X-ray imaging, and there is also growing demand in industrial and veterinary.
• While DT already has offering in high-end flat panel imaging with CMOS technology, with the acquisition of Haobo the company broadens its flat panel offering into lower price point detectors.
• Haobo’s customer base centralizes in the industrial segment while DT has the muscles to monetize the technology for its existing medical customer base. However, positive EBIT is expected not until 2025 due to the conservativity of medical customers.
• Haobo's enterprise value amounts to EUR 14m and net sales were EUR 3.0m in 2022. EV/Sales 4.7x valuation implies the strategic value of the acquisition with DT mainly acquiring technology and capabilities. The acquisition will be financed with existing cash and a new term loan. In addition, DT has agreed on an increase in the existing revolving credit line to finance growth-enabling investments.
• DT will acquire 90% of the shares in Haobo from its founders and main owner. The founders and management will continue to hold 10% of the shares. DT has agreed on an option to acquire the shares of the Haobo management when certain performance targets are met. Closing is expected by the end of June 2023.
• In our view, the acquisition offers DT new opportunities in medical markets while we also foresee the growth base in industrial markets to further accelerate. We however foresee the impact materializing during 2024-26.
• For now, we see the acquisition having no significant impact on our near-term estimates. We retain our SELL rating with elevated valuation, and TP of EUR 16.5 with estimates intact.

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Security and digital IT services from under the same roof
The company is currently under a large turnaround after massive organizational changes made during 2017-2021. The current business consists of two separate but complementary businesses of security and IT services. EBITDA has already seen positive development during 2021-22, but the company has still work to be done until reaching its target of a 10% EBITDA margin. We see the growth prospects as good with strong underlying megatrends supporting the market growth. In addition, Loihde has lots of up- and cross-sales opportunities within the company which consists of multiple subsidiaries which originally have been formed from acquired companies.

Comprehensive offering as a competitive factor
In our view, the company stands out from its competitors with its unique offering in which the company can utilize industry-overlapping capabilities to deliver next-gen solutions. For example, the company has delivered to Finnish Customs physical security surveillance service which is highly enforced by intelligence. Moreover, with the One Security concept, the company provides both physical and digital security services in which the data collected from physical devices is enriched by analytics to provide either stronger security or to support business decisions. 

Valuation not challenging, but further evidence is needed
We view the current valuation of Loihde as not challenging, but with a sustainable profitability level still unproven, we justify multiples below the peer group median. We value Loihde with 23E EV/EBITDA and EV/EBIT multiples of 6.4x and 9.6x respectively. The near future includes some uncertainty with slowing demand for DiDe. We initiate the coverage of Loihde with a HOLD rating and TP of EUR 16.0.

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H2 below our expectations
Netum reported H2 results below our expectations. Revenue grew 14.7% (3.8% organic growth) to EUR 13.7m (Evli EUR 15.8m). EBITA amounted to EUR 0.8m (Evli EUR 1.3m). Growth was partially affected by a slow start to certain projects, which along with frontloaded growth investments, internal development projects, and wage and general cost increases lowered profitability. Netum’s BoD proposes a dividend of EUR 0.11 per share (Evli EUR 0.10). Netum expects revenue growth of over 20% in 2023 and an EBITA-margin of over 10%.  

Confidently eyeing clear double-digit growth in 2023
The growth figures in H2/22 were rather disappointing after solid double-digit organic growth in H1, but with the healthy pipeline management appeared very confident in achieving the targeted growth in 2023. Growth will to a smaller extent be aided by previous acquisitions, with Studyo Oy being the most recent acquisition in December 2022, but the bulk will need to be organic. Price competition in the public sector tenders remains stiff, but increased focus also on the private sector, an area where Netum’s offering has been more limited, opens up new potential. We have somewhat lowered our estimates due to the below expectations revenue in H2/22 as well as through a more cautious take on margin improvement speed. We still expect a 2.7%p y/y EBITA-margin improvement mainly through improved billing rates. The perceived rather good ability to transfer inflationary impact on customers should also benefit.

BUY with a target price of EUR 4.2
Despite slightly lowered estimates, the improved visibility regarding the growth outlook reduces the near-term uncertainty and we retain our target price of EUR 4.2, valuing Netum at around 16x 2023e P/E (goodwill amortization adjusted). Our BUY-rating remains intact. 

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• Netum’s net sales in H2 amounted to EUR 13.7m (EUR 12.0m in H2/21), below our estimates (Evli EUR 15.8m). Net sales grew 14.7% y/y, of which 3.8% was organic growth. 
• EBITA in H2 was EUR 0.8m (EUR 1.4m in H2/21) and comparable EBITA EUR 0.8m (EUR 1.5m in H2/21), below our estimates (Evli EUR 1.3m/1.3m). Profitability was affected by growth investments and internal development projects as well as wage and general cost increases.
• Operating profit in H2 amounted to EUR -0.1m (EUR 0.7m in H2/21), below our estimates (Evli EUR 0.4m), at a margin of -0.8%. 
• Earnings per share was EUR -0.03 (H2/21: 0.04) vs. our estimate of EUR 0.01.
• Personnel at the end of the period amounted to 276 (217).
• Guidance for 2023: Netum expects its revenue to grow by at least 20% and the EBITA-margin to be at least 10% (Evli 2023e: 17% growth and 13% EBITA-margin).
• Dividend proposal: Netum’s BoD proposes that a dividend of EUR 0.11 per share be distributed (Evli EUR 0.10).

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Update increases ore reserves to 29 400 ounces of gold

The published update increases Pampalo reserves by 60% when comparing to the ore reserve status at the end of 2021. The ore reserves are doubled in ore tonnes as the open pit grades dilute the total grade, the Pampalo underground gold grades are at similar level compared to the previous ore reserve update. Most of the reserve increase comes from the underground drilling programme that was completed in 2022, the programme included 117 drill holes in total between the levels 815 and 875.

 

Visibility remains rather low

The current ore reserves in Pampalo are sufficient for roughly three years of gold production at the current production rate. The remaining production potential depends on the successfulness of the company’s exploration efforts in both Pampalo underground mine and in the Karelian gold line. The company’s mid-term target is to define over one-million-ounce gold mineralization on the Karelian gold line by the end of 2025. To reach the target, the company has started exploration drilling in the area. Despite limited visibility for exploration, the company's targeted zones, which have not been thoroughly investigated before, show promising potential.

 

BUY (HOLD) with a TP of EUR 6.5 (6.5)

We have made only slight adjustments to our SOTP-model. The increased reserves provide slightly better visibility for the production in Pampalo, on the other hand, we continue to see risks related to the value realization of the US asset portfolio. Endomines trades currently at a slight discount to its peers based on EV/Resources multiple when including the company’s historic resources (Figure 1). Due to a 13% share price decline since our previous update, we upgrade our rating to BUY (HOLD), noting however that junior gold miners entail significant risks.

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Q4 close to estimates, FY ’23 profitability guidance soft

Enersense top line grew 37% y/y to EUR 90m vs our EUR 87m estimate. All four segments grew, especially Power and International Operations (high-voltage projects in the Baltics drove revenue). Power’s EUR 8.7m y/y EBITDA gain included EUR 7.5m in wind power gains as the projects progressed faster than expected. Other segments’ profitability levels didn’t fare that well compared to Q4’21 as inflation hadn’t yet surged then. Investments in the ERP system and offshore wind power subtracted EUR 2.7m. Voimatel deal costs also weighed Q4; we hadn’t included the deal in our estimates but note it would’ve been a positive driver should it have gone through. The EUR 4.3m adj. EBITDA topped our estimate by EUR 0.4m while the EUR 1.1m EBIT missed our estimate by EUR 0.6m. Guidance didn’t surprise in terms of revenue, however the expectation for adj. EBITDA was soft (EUR 15m midpoint vs our EUR 20m estimate).

We make downward revisions to our profitability estimates

We cut our profitability estimates for FY ’23 by EUR 5.5m while we make minor upward revisions to our top line estimates. Last year’s Q2 was exceptionally soft due to project delays and a Finnish ICT strike. FY ’23 should see more regular project patterns, in addition to which inflation is moderating and at least is no more any surprise. The ERP system costs will increase this year, in addition to which wind power developments, both onshore and offshore, will create additional costs.

Longer term upside potential, lacks short-term drivers

Enersense is valued almost 20x EV/EBIT on our FY ’23 estimates, which in our view reflects the fact that profitability will remain below potential this year due to investments in the ERP system and wind power. Last year’s results were plagued by inflation, and even though the situation is easing we believe some cost headwinds will remain this year. Double-digit growth is likely to continue, and we estimate decent single-digit growth for FY ’24. Earnings growth potential is thus strong from a medium-term perspective, but margins may stay somewhat muted in the short-term. The valuation equals 8x EV/EBIT on our FY ’24 estimates. Our new TP is EUR 6.5 (7.0); we retain our HOLD rating.

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• Enersense Q4 revenue increased 36.6% y/y to EUR 90.0m, compared to our EUR 86.5m estimate. Top line grew especially within Power and International Operations due to high volumes and project progress.
• Adjusted EBITDA was EUR 4.3m vs our EUR 3.9m estimate. EBIT landed at EUR 1.1m, compared to our EUR 1.7m estimate. Power’s profitability improved significantly, while Smart Industry and International Operations weakened considerably due to e.g. inflation. Investments in offshore wind power and the new ERP system had a negative impact of EUR 2.7m.
• Order backlog amounted to EUR 415m at the end of Q4, compared to EUR 291m a year ago. Onshore wind power project portfolio stood at approximately 8,000MW, compared to 3,000MW at the end of Q3’22.
• The BoD proposes EUR 0.10 per share return of capital to be distributed for the year, in line with our estimate.
• Enersense guides FY ’23 revenue to be in the range of EUR 280-310m and adjusted EBITDA in the range of EUR 12-18m. Investments in and the development of the new ERP system as well as offshore and onshore wind power will impact profitability. The projects should not burden profitability any more next year.

Open report

No surprises in Q4; FY ’22 growth not to be repeated

Dovre continued to grow at a 14% y/y rate in Q4 and reached EUR 48m in top line vs our EUR 45m estimate. There were no big surprises as Consulting and Renewable Energy both grew by double digits whereas Project Personnel remained flat. An FPSO project in Singapore delivered to Equinor no longer contributed, but otherwise growth continued in Norway, Finland, and North America. Dovre disclosed preliminary Q4 figures before the report and the EUR 2.1m EBIT was in line with our estimate. Last year’s growth is not to be repeated but many Norwegian clients have extended their agreements while Consulting Finland has performed as expected after the eSite industrial VR acquisition. The Finnish wind power market helped Suvic grow 87% last year; growth is likely to be very modest this year relatively speaking however we still estimate a high single-digit figure.

EBIT should hold up at least flat in the short-term

The summer period is important for Renewable Energy and negotiations are still going on. Norway introduces new legislation in Q2 which regulates temporary staffing in various contexts, and it may also affect white collar work. Project Personnel and Consulting are coordinating with clients to make sure they comply. We make small revisions to our revenue estimates and see group growth at just above 3% this year. We revise our EBIT estimate for FY ’23 down to EUR 8.6m (prev. EUR 10.0m); we revise both Project Personnel and Consulting down by EUR 0.2m and Renewable Energy by EUR 1.0m. In our view Dovre’s guidance doesn’t seem demanding and our estimates are conservative. The worst inflationary period has likely passed and wasn’t such a big issue for Dovre, but the lingering level may still limit margin expansion now that growth is much more modest.

There remains earnings growth potential beyond this year

Dovre still trades only 7x EV/EBIT on our FY ’23 estimates while peer multiples, for all three segments, have gained significantly in the past few months. Our SOTP valuation indicates current fair value to be slightly north of EUR 0.80 per share. We thus update our TP to EUR 0.80 (0.75) and retain our BUY rating.

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• Dovre Q4 revenue grew by 13.6% y/y to EUR 48.1m, compared to our EUR 45.4m estimate. Project Personnel amounted to EUR 23.0m vs our EUR 22.8m estimate, while Consulting was EUR 4.8m vs our EUR 4.3m estimate. Renewable Energy landed at EUR 20.2m, compared to our EUR 18.3m estimate.
• EBITDA came in at EUR 2.5m vs our EUR 2.3m estimate. EBIT was EUR 2.1m, compared to our EUR 2.1m estimate. Project Personnel EBIT was EUR 1.1m vs our EUR 1.1m estimate, whereas Consulting landed at EUR 0.9m vs our EUR 0.7m estimate. Renewable Energy amounted to EUR 0.4m vs our EUR 0.6m estimate.
• The BoD proposes EUR 0.01 per share dividend to be distributed for the year, compared to our EUR 0.01 estimate.
• Dovre guides FY ‘23 revenue to improve y/y and EBIT to be about the same as previous year. Norway introduces new legislation in Q2 which regulates the hire of temporary employees in various situations. Its impact on Project Personnel and Consulting is yet unclear as the segments typically employ white collar staff. Suvic’s sales cycle creates some uncertainty as negotiations for the summer period have not yet been fully completed.

Open report

Profitability advanced in Q4 as plant productivity improved

Scanfil Q4 top line grew 16% y/y to EUR 222m vs the EUR 216m/218m Evli/cons. estimates. Without spot purchases growth was 17% y/y, compared with the long-term target of 5-7%. There have been price increases, but volumes have mainly driven revenue. Demand remained high especially within accounts belonging to Automation & Safety, Energy & Cleantech as well as Medtech & Life Science. Scanfil’s guidance suggested EBIT would improve over the year, yet the EUR 13.4m EBIT was well above the EUR 12.8m/12.5m Evli/cons. estimates. EBIT margin, excluding spot purchases, was 6.5% as better component availability helped productivity. The component situation continues to normalize and should no longer be such a major issue, while inflation is now seen mostly in the low single digits.

Scanfil has already added some capacity to meet demand

Scanfil has achieved double-digit growth two years in a row and has already added capacity. This year sees capex in new electronics manufacturing lines in Atlanta (also widens services in the US) and Sieradz (a new building would make the Polish plant the main electronics production site in Europe). We estimate the guidance suggests close to 10% growth for the year excluding spot purchases; growth should be mostly driven by volumes rather than prices. Advanced Consumer Applications’ top line may decline this year due to the headwind from fading component purchases, but other segments should be positioned to achieve either flat or some positive headline revenue development. We estimate Automation & Safety to grow 10% nominally this year (in the high teens excluding spot purchases).

We don’t find valuation yet too expensive

The 9.5x EV/EBIT multiple, on our FY ’23 estimates, isn’t low in Scanfil’s historical context but remains in line with peers’, while Scanfil’s is still likely to achieve somewhat better margins than a typical peer. For FY ’24 we estimate 5% growth and 6.2% EBIT margin, which we view conservative in the light of long-term targets; the corresponding 8.7x EV/EBIT multiple is in line with peers’. We update our TP to EUR 8.75 (7.0) and retain BUY rating.

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• Scanfil Q4 revenue increased by 15.9% y/y to EUR 222.3m, compared to the EUR 215.6m/218.3m Evli/consensus estimates. The figure includes EUR 14.6m in invoicing of spot market purchases.
• Advanced Consumer Applications amounted to EUR 56.3m vs our EUR 59.8m estimate, while Energy & Cleantech was EUR 61.3m, compared to our EUR 60.3m estimate. Automation & Safety was EUR 51.4m vs our EUR 46.0m estimate.
• EBIT landed at EUR 13.4m vs the EUR 12.8m/12.5m Evli/consensus estimates and hence EBIT margin amounted to 6%. FX rate changes had a positive impact of EUR 0.3m. Continued good customer demand and improved manufacturing performance (due to better component availability) supported profitability to a high absolute level, whereas spot market purchases with negligible margin limited operating margin.
• The BoD proposes EUR 0.21 per share dividend to be distributed for the year, compared to the EUR 0.20/0.20 Evli/consensus estimates.
• Scanfil guides FY ’23 revenue to be in the range of EUR 820-890m and EBIT of EUR 49-55m. The number of spot market purchases is likely to decrease significantly compared to previous year.

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Heady growth continued in H1’22, but H2’22 was slower

Exel’s Q4 revenue landed at EUR 31m vs the EUR 36m/35m Evli/cons. estimates. Destocking, after a period of high demand following the initial shock of the pandemic, has been an issue lately and is expected to continue in H1’23. Equipment and other industries, the third largest customer group, was particularly soft relative to our estimates but there seems to have been nothing special going on apart from the destocking issues as well as normal cyclicality. The soft top line left adj. EBIT at EUR 0.9m vs the EUR 2.4m/2.0m Evli/cons. estimates.

H1’23 will still be soft; guidance suggests better H2’23

Exel sees improvement from Q2 in orders as well as EBIT; top line is to remain flat this year, while EBIT has ground from which to gain. The Runcorn cuts should produce EUR 1.6m in annual savings. Inflation hasn’t been a big issue for Exel and raw materials are stabilizing. Wind power should again grow, according to Exel, at a 15% y/y pace from H2’23. Wind power was Exel’s largest customer in 2019-20 and continued to grow at a CAGR of 16.5% in FY ’20-21, however its revenue fell by EUR 5.3m last year and was overtaken by Buildings and infrastructure already in 2021. Exel got its challenges in the US sorted out last year, but the relative softness in the three largest customer groups left its adj. EBIT for the year at EUR 8.0m (we consider it a modest level). We note the four smaller industries together grew by 19% last year, although this was mostly attributable to Transportation as it enjoyed pent-up demand after the pandemic and received initial orders for a new aerospace application.

Valuation is not challenging if growth returns in H2’23

Exel is valued 9.5x EV/EBIT on our FY ’23 estimates, which we consider a neutral level. The multiple is not very low, however we estimate an EBIT margin of 6.3% for the year whereas the company should still be on track towards its long-term 10% target (it reached almost 9% in FY ’20). For FY ’24 we estimate 7% growth and 7.5% EBIT margin, which would translate to an EV/EBIT of 7.5x. Our new TP is EUR 5.8 (6.5); our rating is BUY.

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Q4 fell short of expectations
Etteplan reported Q4 results below expectations. Revenue grew 6.8% (organic 1.0%, org. const. FX 2.8%) to EUR 91.0m (EUR 99.0m/98.0m Evli/cons.) while EBIT came in at EUR 8.4m (EUR 8.9m/9.0m Evli/cons.). Growth was affected by a high level of sickness-related absences. On a service area level Engineering solutions continued solid performance. Software and Embedded Solutions saw good improvements in profitability from actions previously taken to enhance operational efficiency. Technical Documentation Solutions saw lower profitability due to below expectations performance of the in 2022 acquired Cognitas. The BoD proposed a dividend of EUR 0.36 (0.32/0.34 Evli cons.). 

2023 expectations rather decent despite headwinds 
Considering the below expectations Q4, Etteplan’s 2023 revenue guidance (EUR 360-390m) is slightly better than we expected, with our pre-Q4 estimates at the guidance range mid-point. The EBIT guidance of EUR 28-33m was slightly below expectations on the mid-point. Our 2023 estimates are essentially unchanged, revenue expectations at EUR 375.3m and EBIT at EUR 31.5m. Margins are under pressure through wage inflation, but we continue to earnings improvement potential through improved operational efficiency in Software and Embedded Solutions and Technical Documentation Solutions while also assuming decent prerequisites to transfer inflation to prices. Further M&A activity also provides good potential for more rapid growth.

HOLD with a target price of EUR 16.0 (15.0)
Despite elevated uncertainty and cost inflation and a more recent slow-down in recruitments having an impact, the outlook going forward still generally appears quite favourable and Etteplan further noted a positive development direction of market sentiment. We adjust our TP to EUR 16.0 (15.0), valuing Etteplan at ~17x 2023e P/E, HOLD-rating intact. 

Open report

Q4 was still plagued by many profitability-hurting issues

Pihlajalinna’s top line continued to grow at an annual rate of 22% in Q4; organic growth remained above 7% even with the headwind from lower Covid-19 services revenue. The lack of such services was one factor limiting profitability, in addition to continued high absence costs as well as public specialty care costs which were now tilted towards Q4. Employee benefit expenses were especially high. Key profit measures missed estimates by EUR 7m. Pihlajalinna guides increasing revenue (we estimate 3% growth) and improving adj. EBITA for the year. Last year involved a lot of transient cost factors, but the company also takes many measures to address the profitability challenge.

H2’23 should see meaningful earnings growth

Pihlajalinna has gone through a similar exercise in 2019. The company looks to e.g. cut physicians’ administrative roles and prune its service network. Price increases are to come in at 5-10%, especially within the private sphere while public contracts are also under review. The company’s financial headroom is now tight, but it stays within its covenant terms and doesn’t pay dividend for the year. We cut our FY ’23 EBIT estimate by EUR 5m but estimate EUR 12m EBITA improvement for the year.

At least the first quarters now seem to lack upside drivers

Valuation isn’t too cheap despite the profitability gains which are to be seen this year. The 19x EV/EBIT valuation, on our FY ’23 estimates, is neutral at best as it is in line or even slightly above that of peers. For FY ’24 we estimate an EBIT margin of 5.4% (some 100bps gain y/y), which may well prove too conservative, but the respective 14x multiple is still no more attractive than peer multiples. Pihlajalinna’s profitability measures are more likely than not to drive upside over the longer perspective, but in our view the share lacks material upside drivers from a short-term perspective. Pihlajalinna could specify its guidance upwards later this year, which would be one such driver. We revise our TP to EUR 9.0 (10.0); our new rating is HOLD (BUY).

Open report

• Net sales in Q4 were EUR 91.0m (EUR 85.3m in Q4/21), below our and consensus estimates (EUR 99.0m/98.0m Evli/Cons.). Growth in Q4 amounted to 7% y/y, of which 1% organic growth.
• EBIT in Q4 amounted to EUR 8.4m (EUR 7.8m in Q4/21), below our and consensus estimates (EUR 8.9m/9.0m Evli/cons.), at a margin of 9.2%.
• EPS in Q4 amounted to EUR 0.30 (EUR 0.25 in Q4/21), above our estimates and consensus estimates (EUR 0.21/0.27 Evli/cons.).
• Net sales in Engineering Solutions in Q4 were EUR 48.9m vs. EUR 50.6m Evli. EBITA in Q4 amounted to EUR 5.3m vs. EUR 5.3m Evli. 
• Net sales in Software and Embedded Solutions in Q4 were EUR 24.3m vs. EUR 28.8m Evli. EBITA in Q4 amounted to EUR 2.8m vs. EUR 3.1m Evli. 
• Net sales in Technical Documentation Solutions in Q4 were EUR 17.7m vs. EUR 19.4m Evli. EBITA in Q4 amounted to EUR 1.4m vs. EUR 2.0m Evli. 
• Dividend proposal: Etteplan proposes a dividend of EUR 0.36 per share (EUR 0.32/0.34 Evli/Cons.).
• Guidance for 2023: Revenue is estimated to be EUR 360-390m (Evli EUR 375.8m) and the operating profit is estimated to be EUR 28-33m (Evli EUR 31.4m)

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• Q4 revenue decreased by 15% y/y to EUR 31.0m, compared to the EUR 36.3m/35.0m Evli/consensus estimates. All geographical regions declined y/y, particularly North America.
• Wind power amounted to EUR 5.5m vs our EUR 7.2m estimate. Buildings and infrastructure came in at EUR 8.1m, compared to our EUR 7.8m estimate, whereas Equipment and other industries totaled EUR 4.3m vs our EUR 7.3m estimate. Machinery and electrical as well as Transportation grew y/y.
• Adjusted EBIT was EUR 0.9m, compared to the EUR 2.4m/2.0m Evli/consensus estimates. Absolute profitability and operating margin hence remained roughly flat y/y as good cost management compensated for lower revenue.
• Order intake amounted to EUR 25.6m in Q4, in other words decreased by 16% y/y.
• The BoD proposes EUR 0.20 per share dividend to be distributed for the year, compared to the EUR 0.25/0.23 Evli/consensus estimates.
• Exel guides FY ’23 revenue to be at last year’s level and adjusted EBIT to increase compared to last year. Wind power particularly should support development during the latter part of the year.

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Challenges visible in Q4
Solteq reported Q4 results below our expectations. Net sales in Q4 were EUR 16.9m (Evli EUR 17.4m), declining 7.5% y/y. The operating profit and adj. operating profit in Q4 amounted to EUR -1.2m and -0.8m respectively (Evli EUR 0.7m/0.7m). Solteq Digital’s performance was fairly in line with expectations, with a y/y decline in revenue and profitability. Solteq Software’s profitability was clearly below expectations, with an adj. EBIT of EUR -1.3m (Evli EUR 0.0m). The segment has been burdened by challenges in Solteq Utilities’ software development and we had evidently underestimated the magnitude of the impact on Q4. Solteq’s BoD as expected proposed that no dividend be paid. 

Guidance for 2023 softer than anticipated
Solteq’s 2023 guidance is soft in comparison with our pre-Q4 estimates, expecting revenue to remain on 2022 levels and EBIT to be positive. Solteq has typically not given numerical guidance ranges, which leaves room for speculation regarding profitability, but with the expected flat revenue development and cost pressure caused by inflation we now expect EBIT to be only slightly positive at EUR 0.8m. We expect the challenges faced in Solteq Software to continue during H1/23 and gradual improvement through the year, and the headwinds faced in Solteq Digital through the market demand situation to continue to have a slight negative effect.  

HOLD with a target price of EUR 1.3
Despite the weaker than expected Q4 and softer than anticipated expectations in 2023 we see no fundamental changes to the investment case. Financially 2023 will clearly be a gap year on group level. Upside continues to lie in the long-term development and success of profitably growing the Utilities-business and of interest for the investment case in the near-term will be the development of said business. 

Open report

• Q4 revenue grew by 21.8% y/y to EUR 188.4m vs the EUR 177.8m/179.1m Evli/consensus estimates. Organic growth was 7.4% and would have been 12.1% without Covid-19 services. Corporate customers amounted to EUR 65.1m, compared to the EUR 59.0m/58.6m Evli/consensus estimates. Private customers were EUR 28.3m vs the EUR 26.3m/26.9m Evli/consensus estimates, while Public sector customers totaled EUR 113.9m vs the EUR 112.4m/112.2m Evli/consensus estimates.
• Covid-19 services revenue was EUR 2.8m, down by EUR 7.3m y/y.
• Adjusted EBITDA amounted to EUR 12.0m, compared to the EUR 17.5m/18.5m Evli/consensus estimates. Adjusted EBITA was EUR 2.2m vs our EUR 9.0m estimate, while adjusted EBIT was EUR 0.1m vs the EUR 7.0m/7.0m Evli/consensus estimates. Employee benefit expenses were exceptionally high in Q4.
• The BoD proposes no dividend distribution for the year vs the EUR 0.25/0.24 Evli/consensus estimates.
• Pihlajalinna guides revenue to increase (EUR 690.5m in 2022) and adjusted EBITA to improve (EUR 26.7m in 2022) in FY ‘23.

Open report

Topline came in above expectations
In Q4, Vaisala grew by 13% (FX adjusted 8%) y/y to EUR 141.6m. The growth was supported by IM’s all segments and W&E’s aviation and meteorology. Spot component purchases continued, but the group gross margin remained flat. With relatively high growth in fixed costs, EBIT fell short of expectations. Q4 EBIT amounted to EUR 12.6m, reflecting a margin of 8.9%. Vaisala expects the component availability to neutralize during H1’23, and there have emerged signs of improvements already. In our view, this should result in an improved gross margin from H2’23 onwards. For 2022, the BoD proposes a DPS of 0.72.

The hot market supports demand also during 2023-24
Underlying megatrends provide continuity for Vaisala’s growth story. In addition, the company has made the right decisions during the past few years in our view, which has resulted in an expansion of market share. For example, investments in digital and renewable businesses have boosted W&E’s topline and we foresee that earlier-known steadily growing and somewhat cyclical business becomes more resilient to economic fluctuation. Moreover, with higher product margins, we see some room for profitability improvement. In addition, the company never halted R&D investments during the hardest times of COVID which enhanced Vaisala’s technology leadership position in our view. Vaisala has also benefitted from pent-up demand due to the pandemic which however likely fades away. In other words, achieving annual double-digit growth becomes even harder. We however see Vaisala as an attractive investment case with coming scalability providing EPS growth.

HOLD with a target price of EUR 44.0
With estimate revisions made, our 23E EBIT saw a 5% increase. Vaisala trades approx. in line with its peers. We retain the HOLD rating and adjust TP to EUR 44.0 (41.0), reflecting increased 23-24E estimates. 

Open report

H2 all in all slightly below our expectations
Fellow Bank’s H2 results came in slightly below our expectations. Total income amounted to EUR 7.9m (Evli EUR 7.1m). Net income of EUR 6.6m was quite in line with expectations (Evli EUR 6.8m), while net fee and commission income of EUR 1.5m beat our expectations (Evli EUR 0.3m), affected by changes to recognition of commission fees under IFRS 15. The pre-tax profit during H2 amounted to EUR -2.3m (Evli EUR -0.7m), with the difference compared with our estimates arising mainly from larger than estimated expected and realized credit losses, with total OPEX also above our estimates. OPEX was still affected by exceptional items relating to the startup of operations of some EUR 0.7m. The total capital ratio amounted to 16.8% (target adjusted: 18% -> 16%) and H2 cost / income ratio to 76%. 

Growth and positive profitability expected in 2023
Fellow Bank expects revenues to grow in 2023 and to achieve a positive profit level on a monthly basis during H1/2023. The market environment poses some threats to lending volume growth, with Fellow Bank having adopted somewhat stricter lending policies. We currently nonetheless expect solid y/y growth in 2023 mainly driven by the ramp-up focused comparison period but also good loan portfolio growth. We have further raised our 2023e PTP estimate to EUR 2.9m (1.8m) following a readjustment of the cost base assumptions. We expect 2023 to be quite busy for Fellow Bank with the launch and ramp up of new services. The company’s small business in Poland is also most likely to be divested and the further strengthening of the company’s capital is to be expected.  

HOLD with a target price of EUR 0.40
Valuation upside continues to remain limited in the near-term, affected further by some market uncertainties and on 2024 estimates, compared with peer multiples, current valuation levels appear fair. We retain our TP of EUR 0.40 and HOLD-rating.

Open report

Q4 EBIT came in above expectations
Marimekko delivered solid Q4 figures, especially considering the soft domestic wholesale market and strong comparison figures. Q4 net sales grew by 1% y/y to EUR 48.4m. The growth was mostly supported by int’l markets while sales in Finland declined by 2% due to lower non-recurring wholesale deliveries. Moreover, domestic wholesale customers experienced softness which was visible also in Marimekko’s Q4 net sales. Higher discounts and lower licensing income pushed the gross margin below the comparison period. In addition, Marimekko accordingly continued its investments in future growth and scalability which resulted in elevated fixed costs. Thus, EBIT fell short of the comparison period but landed above our expectations. Q4 adj. EBIT amounted to EUR 6.9m (8.9% margin). The BoD proposes a DPS of EUR 0.34 for 2022.

A strong brand provides growth in a challenging market
Finland discovered some softness in Q4 which we expect to continue also in Q1’23. The company guides 2023 revenue to grow and an EBIT margin between 16-19% (22: 18.2%). In our view, strong retail growth in 2022 reflects the power of the Marimekko brand and its capability to deliver growth also in a challenging market. In addition, non-recurring wholesale deliveries will support H2 growth in Finland. However, we foresee the growth pace to slow down from levels seen during the past few years. We expect Marimekko to grow by 5.3% in 2023, with domestic growth of 6% and int’l increase of 5%. With 23E gross margin flat and cost pressures arising from fixed costs, we expect no major expansion in 23E EBIT margin, with it amounting to 18.3%.

HOLD with a target price of EUR 10.0
We made no major changes in our estimates with the company’s guidance coming in quite in line with our expectations. The company’s 23-24E valuation seems quite modest compared to history and peers, but with uncertainty elevated, we retain our HOLD rating and TP of EUR 10.0. On the other hand, a subdued growth pace also justifies lower multiples.

Open report

• Group result: Order received continued in a growing trend with y/y increase of 17%. Order book was strong at EUR 181.5m, but declined q/q. Driven by both businesses, net sales topped our estimates, by increasing by 13% to EUR 141.6m (140.0/139.0m Evli/cons.). Gross margin remained flat. With volumes high, EBIT also improved to EUR 12.6m, but fell short of our and cons. estimates (15.2/18.3m Evli/cons.). Profitability was harmed by higher fixed costs. EBIT margin was 8.9% (Q4’21: 9.5%). EPS amounted to EUR 0.25 (0.3/0.42 Evli/cons.).
• Industrial measurements (IM): Orders received increased by 11%. Order book was yet again record high, at EUR 41.8m. 27% y/y growth in order book was supported by good sales in industrial instruments, life science, and power. Net sales amounted to EUR 60.2m (Evli: 61.4m), representing y/y growth of 20%. Growth was good in all market segments. Q4 EBIT improved and amounted to EUR 10.8m (Evli: 12.6m), reflecting a margin of 17.9%.
• Weather and Environment (W&E): Orders received grew strongly by 24%. Order book was also strong, at EUR 139.6m, but below Q3’22. 10% y/y change in order book was driven by renewable energy and road weather. Net sales amounted to EUR 81.3m (Evli: 78.6m) and grew by 9% y/y. EBIT amounted to EUR 1.8m (Evli: 2.7m) and was affected by higher fixed costs. EBIT margin was 2.2%.
• 22 DPS: The BoD proposes EUR 0.72 (0.7/0.71 Evli/cons.) dividend per share for FY’22 with a payout rate of ~60%.
• Market outlook: Industrial instruments, life science, power and energy and liquid measurements to grow. Renewable energy, road weather and automotive to grow. Aviation to remain flat or grow. Meteorology to remain flat.
• 23 guidance: Net sales of EUR 530-570m, mid-point implying ~7% growth. EBIT is estimated to reach EUR 70-85m, mid-point indicating a ~14% margin.

Open report

• Total income during H2/22 amounted to EUR 7.9m (Evli EUR 7.1m). Net interest income amounted to EUR 6.6m (Evli EUR 6.8m) and net fee and commission income to EUR 1.5m (Evli EUR 0.3m). 
• In H2 lending volumes exceeded those of H1 by 43% and the target increase of 46% in the loan portfolio for personal customers was reached. 
• The loan portfolio at the end H2 amounted to EUR 163.8m and the deposit amounted to EUR 246.8m.
• The pre-tax profit during H2 amounted to EUR -2.3m (Evli EUR -0.7m). The difference compared with our estimates was mainly due to a larger than estimated expected and realized credit losses, with total OPEX also above our estimates.
• Earnings per share amounted to EUR -0.03 compared with our estimate of EUR -0.01.
• CET1 and the CET1 ratio amounted to EUR 17.7m and 12.6% and total capital ratio to 16.8% 
• The cost / income ratio amounted to 113%.
• Outlook for 2023: The bank’s revenues are estimated to grow from 2022 and a positive profit level on a monthly basis is estimated to be reached during H1/2023. Capital adequacy target set at 16%.
• Dividend proposal: The BoD proposes that no dividends be paid (Evli EUR 0.00)

Open report

Volumes developed as expected

Revenue in H2 amounted to EUR 7.9m, roughly in line with our estimate of EUR 8.1m. Gold production amounted to 5,123 oz vs. our estimate of 5,402 oz. Both EBITDA & EBIT missed our estimate as EBITDA for H2 2022 came at EUR -3.0 (Evli EUR 0.6m) and EBIT at EUR -5.4m (Evli EUR -0.8m). The second half of the year was negatively affected especially by increased cost of raw materials and energy. The second half was also negatively affected by non-recurring costs related to the transfer of domicile from Sweden to Finland.

 

2023 is an important year for the company

Endomines focused on building the foundation for its strategy implementation during the second half of 2022. In 2023, the company aims to build on this foundation and start to implement its strategy on a wider scale. In our view, the most important operational factors for the company in 2023 include improved mining operations in Pampalo, exploration activities in the Karelian gold line and the partnership negotiations in the United States.

 

HOLD with a target price of EUR 6.5

We have done slight adjustments to our estimates for the Pampalo mining operations as the company’s expectations for 2023 were slightly stronger than we had earlier estimated. We currently include only reserves and resources between the 755-815 and 815-875 levels in Pampalo to our estimates and therefore we do not estimate production post 2024. In our SOTP valuation approach, the rest of the value for the company’s operations in Finland is derived from a real option model which considers the possibility of Pampalo LoM increase and the possibility for the utilization of Karelian gold line satellite deposits. Despite the cautiously positive outlook for 2023, we still see uncertainty regarding the successfulness of the company’s exploration activities and the value realization of the US assets. We retain our HOLD-rating and TP of EUR 6.5.

Open report

ESL and Leipurin topped our estimates, while Telko was soft

Aspo’s Q4 revenue landed at EUR 165m, compared to the EUR 157m/158m Evli/cons. estimates, while adj. EBIT was EUR 11.3m vs the EUR 12.1m/11.7m Evli/cons. estimates. The figures were hence overall relatively close to estimates, however Telko’s profitability was clearly below what we estimated whereas ESL and Leipurin were both somewhat better. Telko saw certain positive developments in Q4 as strong Western demand drove higher volumes organically and through acquisitions; lubricants also fared well, but plastics and chemicals prices decreased, in addition to which the challenging operating environment in Ukraine, Russia and Belarus limited profitability.

We already expected considerable EBIT decline for Telko

In our view Telko’s EBIT should begin to stabilize in H1’23 but will not reach the EUR 21m EBIT seen in recent years anytime soon. Aspo’s guidance doesn’t seem to set the bar for Telko very high, which in our view reflects the still highly uncertain environment for pricing and volumes. We previously expected Telko’s FY ’23 EBIT to decline some EUR 10m, and we now estimate the decline at EUR 11.5m. ESL’s outlook remains stable, at least for Q1 when the Supramaxes are still employed with good price levels, but it’s early to say how they might fare in H2’23. Smaller vessels should still have no trouble achieving highly satisfactory results, yet it may be hard to gain on last year. We expect ESL’s EBIT to decline a bit this year, but some of the new hybrid vessels are due to be delivered soon and hence EBIT should find further support even in the case of extended pricing headwinds. The Kobia acquisition’s synergies weren’t yet reflected last year, and hence we expect Leipurin EBIT to increase this year even if inflation and volume trends set some limits to organic development.

Valuation not challenging despite EBIT softness this year

Aspo is valued ca. 9x EV/EBIT on our FY ’23 estimates, which we see reflects relatively low valuation for ESL. An EV/EBIT multiple of 10x could be justified for the niche carrier as Algoma Central, arguably the most relevant peer, is valued above 10x as it derives a big share of its earnings through small dry bulk vessels around the Great Lakes region. We retain our EUR 9.5 TP and BUY rating.

Open report

Q4 report a bit better than expected but nothing major

Finnair’s EUR 687m Q4 revenue was near the EUR 679m/681m Evli/cons. estimates as passenger revenues were some EUR 20m higher than we estimated (ancillary and cargo were a bit soft relative to what we expected). Finnair’s Q4’22 saw 79% of ASK relative to Q4’19, including wet leases, as demand stays high. Fuel prices remained high in the historical context, a crucial factor limiting EBIT when Finnair still missed major volumes due to the recent years’ double whammy. Finnair achieved another positive adj. EBIT, at EUR 17.9m vs the EUR 13.5m/2.7m Evli/cons. estimates, as unit yields continued to advance. Prices should hold up also in Q1 and beyond as demand persists despite potential economic headwinds. We didn’t find any big surprises in terms of cost inflation, but the topic remains very much on the agenda as Finnair continues to proceed towards its 5% EBIT margin target.

Volumes and pricing support profitability development

There are still uncertainties around Chinese demand in particular; from Finnair’s point of view the focus now rests much on Shanghai and Beijing, as opposed to any secondary Chinese cities. Finnair has extended its wet leases, and dynamic pricing has helped unit revenues increase by 25%; ancillary revenue per passenger also increased by 13% compared to 2019. Hence Finnair’s revenue will increase significantly this year, but we expect it to remain 10% short of that for FY ’19. We believe Q1’23 EBIT will be negative as the market has recovered enough so that certain seasonal patterns can again be seen, but for FY ’23 we estimate a positive EBIT of EUR 105m.

Coming through, but most good news seem to be priced in

In our view Finnair is set to achieve a positive EBIT this year, and the positive development should continue in FY ’24, but the company’s profitability continues to lag other airlines. Finnair is valued about 16x and 10x EV/EBIT on our FY ’23-24 estimates, which are levels well above peers’. We see Finnair’s recovery already priced in and hence upside would probably require more than one factor to deliver a positive surprise. We update our TP to EUR 0.47 (0.45) but retain our SELL rating.

Open report

• Q4 group result: Net sales came in below our expectation, by growing by 1% y/ to EUR 48.4m (49.4/48.9m Evli/cons.). Growth was good in int’l markets while domestic sales declined as expected. Adj. EBIT landed at EUR 6.9m (14.3% margin), beating our and cons. expectations (6.4/6.5m Evli/cons.). Although, profitability was negatively impacted by softer gross margin and increased fixed costs.  Adj. EPS amounted to EUR 0.10 (0.13/0.13 Evli/cons.).
• Finland: Net sales amounted to EUR 30.1m (Evli: 29.6m), reflecting y/y decline of 2%. Retail sales developed nicely by growing by 19% y/y while wholesale sales fell short of the comparison period due to a lack of extraordinary deliveries and soft market environment.
• Int’l: Net sales grew by 5% to EUR 18.4m (Evli: 19.8m). Growth was good in the APAC and EMEA regions while Scandinavia and North America developed more moderately.
• 22 DPS: The BoD proposes EUR 0.34 dividend per share for the year 2022 (0.38/0.41 Evli/cons.).
• Market outlook for 23: The company expects Finland to grow with larger extraordinary wholesale sales deliveries than in 2022 as well as both the APAC region and int’l sales to grow. Q1’23 group net sales to fall short of that of the comparison period due to challenging wholesale environment in Finland, lower licensing sales and strong comparison period. 2023 licensing income is expected to come in below the comparison period.
• 23 guidance: The company expects net sales to grow and an EBIT margin between 16-19%.

Open report

• Net sales in Q4 were EUR 16.9m (EUR 18.3m in Q4/21), slightly below our estimates (Evli EUR 17.4m). Growth in Q4 amounted to -7.5% y/y. 
• The operating profit and adj. operating profit in Q4 amounted to EUR -1.2m and -0.8m respectively (EUR 1.3m/1.4m in Q4/21), below our estimates (Evli EUR 0.7m/0.7m). 
• Q4 challenges relates to earlier communicated challenges in Solteq Utilities’ software development and a weakened demand situation. 
• Solteq Digital: revenue in Q4 amounted to EUR 10.3m (Q4/21: EUR 11.7m) vs. Evli EUR 10.8m. Growth amounted to -11.9%. The adj. EBIT was EUR 0.5m (Q4/21: EUR 1.4m) vs. Evli EUR 0.7m. 
• Solteq Software: Revenue in Q4 amounted to EUR 6.6m (Q4/21: EUR 6.6m) vs. Evli EUR 6.6m. The adj. EBIT was EUR -1.3m (Q4/21: EUR -0.0m) vs. Evli EUR 0.0m. 
• Guidance for 2023: group revenue is expected to remain at same levels as in 2022 and operating profit to be positive.
• Dividend proposal: Solteq’s BoD proposes than no dividend be paid (Evli EUR 0.00)

Open report

• Revenue in H2 amounted to EUR 7.9m, roughly in line with our estimate of EUR 8.1m. Gold production amounted to 5,123 oz vs our estimate of 5,402 oz.
• EBITDA in H2 was at EUR -3.0, lower than our estimate of EUR 0.6m. 
• EBIT in H2 amounted to EUR -5.4m (Evli EUR -0.8m)
• During H2, at Pampalo, gold production increased by 47% when comparing to H1. FY production came in at 8,601 oz, slightly lower than the middle point of 2022 FY guidance of roughly 8000 – 9400 Oz.
• Profitability in H2 2022 was affected by cost inflation and non-recurring costs related to the transfer of domicile from Sweden to Finland
• For 2023, the company expects gold production of roughly 11,600 – 13,300 Oz, our estimate for 2023 gold production is currently at 11,693 Oz.
• In terms of profitability, Endomines expects its financial performance to improve considerably from 2022 driven by lower energy prices, positive development of gold prices, lower production costs especially during H2 2023 and higher volumes.

Open report

• Aspo Q4 revenue amounted to EUR 164.6m, compared to the EUR 156.6m/157.6m Evli/consensus estimates.
• Adjusted EBIT was EUR 11.3m vs the EUR 12.1m/11.7m Evli/consensus estimates.
• ESL Q4 top line was EUR 63.3m vs our EUR 66.1m estimate. Adjusted EBIT amounted to EUR 10.6m, compared to our EUR 9.6m estimate. Energy industry cargo demand was especially high and should remain so in H1. ESL’s main customers’ production volumes are expected to be satisfactory, albeit slightly lower than previous year.
• Telko’s revenue was EUR 59.2m, compared to our EUR 52.7m estimate, while adjusted EBIT landed at EUR 1.3m vs our EUR 3.3m estimate. Telko’s net sales and profit will be significantly lower in FY ’23 than the previous year. Plastics and chemicals prices decreased steeply in H2’22 while still above their long-term averages. Some soft price development may continue in H1’23.
• Leipurin revenue came in at EUR 41.3m vs our EUR 37.8m estimate. EBIT was EUR 1.1m vs our EUR 0.7m estimate.
• Other operations cost EUR 1.8m, compared to our EUR 1.5m estimate.
• The BoD proposes EUR 0.46 dividend per share to be paid for the year, compared to the EUR 0.46/0.46 Evli/consensus estimates.
• Aspo guides comparable EBIT to be higher than EUR 35m in FY ’23 (EUR 55.3m in FY ’22).

Open report

Expecting good progress in 2022 to show also in Q4
Etteplan reports its Q4 results on February 17th. Operative performance during the year has so far been fairly solid and we expect the Q4 results to follow suite. Our estimates for revenue and EBIT are EUR 99.0m and EUR 8.9m respectively, with the implied Q4 guidance EUR 86-101m and EUR 7.8-10.8m respectively. Some risks to Q4 growth are posed by more conservative recruitment measures implemented in Q3 and the overall demand situation, although we expect the impact of the former to be more visible in 2023. We expect dividends to decrease y/y due to the exceptional items related to the Semcon offer, with our estimate at EUR 0.32 per share (2021: EUR 0.40), although a y/y increase is not out of question based on the on our estimates expected y/y adjusted earnings improvement. 

Growth seen to slow down in 2023
Etteplan is heading into 2023 with some uncertainty relating to organic growth given the more conservative approach to recruitments and more turbulent demand situation, despite double-digit organic growth so far during FY2022. We currently expect clearly slower organic growth, in the low-mid single digits. We expect acquisitions to still be an important part of Etteplan’s growth strategy in 2023 despite uncertainties and with a few more targeted acquisitions growth could push towards the double-digit mark. In terms of margins, we expect rather flat development y/y, seeing potential for earnings improvement through operative enhancements but also noting inflationary pressure.

HOLD with a target price of EUR 15.0 (13.5)
We have made no changes to our estimates ahead of Q4. With a rise in peer valuation levels, we adjust our target price to EUR 15.0 (EUR 13.5) and retain our HOLD-rating. Our target price values Etteplan at ~16x 2023e P/E, quite in line with peers but below historical levels given current uncertainties.

Open report

• Q4 revenue landed at EUR 687.3m, compared to the EUR 679.0m/681.2m Evli/consensus estimates.
• Adjusted EBIT was EUR 17.9m vs the EUR 13.5m/2.7m Evli/consensus estimates.
• Fuel costs amounted to EUR 228m vs our EUR 222m estimate, whereas staff costs were EUR 115m vs our EUR 115m estimate. All other OPEX+D&A totaled EUR 364m, compared to our EUR 370m estimate.
• Cost per Available Seat Kilometer was 8.18 eurocents vs our estimate of 8.13 eurocents.
• The BoD proposes no dividend to be paid for the year (as expected).
• Finnair expects to operate an average capacity of 80-85%, in terms of ASKs, in 2023 compared to 2019. High demand should support unit revenues in the short-term, while normal seasonality returns, which may result in negative Q1 EBIT. Finnair estimates FY ’23 revenue to increase significantly but will not yet reach the level of FY ’19.

Open report

Bottom line and new orders a bit soft, but no major news

Raute’s EUR 45.7m Q4 revenue grew 4% y/y and was clearly above our EUR 38.0m estimate. The EUR 0.5m Q4 EBIT was soft relative to our EUR 0.7m estimate, despite the high revenue figure, as inflation still limited projects’ profitability; Services revenue continued to grow y/y, but there were changes in mix and certain delivery challenges. The EUR 28m Q4 order intake lacked modernization orders and was soft relative to EUR 36m estimate, however there seem to have been no significant negative changes in market demand since Q3.

We revise our FY ’23 revenue estimate down to EUR 133m

Raute’s earnings recovery path continues without major surprises, however we revise our estimates down as Q4 order intake was lower than we expected; the company begins the year with slightly lower order book than we estimated. European plywood investments (particularly within birch) should remain high, but we estimate European and North American revenues to remain roughly flat this year (both almost doubled in FY ’22); there is more scope for growth in Latin America and Asia-Pacific, but these markets have traditionally been more marginal for Raute. We likewise expect the Services and Analyzers businesses to remain stable in FY ’23, whereas the missing Russian revenue could leave Wood Processing top line down by 20%.

We now estimate FY ’23 EBIT at EUR 2.5m (prev. EUR 5.3m)

Raute’s guidance doesn’t seem challenging from profitability perspective as the minimum implies comparable EBITDA of only ca. EUR 6m (Raute’s comparable EBITDA amounted to EUR 8.7m in H2’22); further growth this year in Europe and North America within smaller equipment orders may not be that easy but a larger (European) order, should it materialize in early FY ‘23, could add a significant amount of revenue and thus help Raute specify its guidance upwards. Raute’s high operating leverage works both ways, but in our view comparable EBITDA of around EUR 8m should be achievable this year even if revenue declines by some 15%. The 17.5x EV/EBIT multiple, on our updated FY ’23 estimates, is not low but acceptable given earnings potential in the long-term. We retain our EUR 11 TP and BUY rating.

Open report

• Raute Q4 revenue was EUR 45.7m vs our EUR 38.0m estimate. Top line grew by 4% y/y. Raute revealed a new reporting structure, according to which Wood Processing generated EUR 33.3m, Services EUR 8.7m and Analyzers EUR 3.7m in Q4.
• EBIT came in at EUR 0.5m, compared to our EUR 0.7m estimate. Comparable EBITDA was EUR 2.7m, of which EUR 1.1m was attributable to Analyzers. Wood Processing generated EUR 0.9m and Services EUR 0.7m.
• Q4 order intake amounted to EUR 28m, while we estimated EUR 36m.
• Order book amounted to EUR 84m at the end of Q4, including EUR 4m attributable to Russia.
• The BoD proposes (as expected) that no dividend is to be paid for the year.
• Raute guides FY ’23 revenue to be above EUR 130m and comparable EBITDA margin of above 4%.

Open report

Expecting strong Q4 
Vaisala guides topline between EUR 500-520m and EBIT between EUR 62-72m for 2022. We expect Vaisala to enjoy a strong end for the year 2022. In our estimates, Vaisala faces a 12% growth by its Q4 topline amounting to EUR 140.0m. We expect W&E to experience a 5% y/y growth in Q4. On the other hand, in Q4, we anticipate IM to record a 23% y/y increase. Even though fixed costs face pressures through front-loaded investments and material costs increase with component shortage, we yet foresee Q4 EBIT improving to EUR 15.2m (10.9% margin). In total, we expect Vaisala’s topline to land a bit above and EBIT a bit below the mid-point of the guidance. With 22E EPS amounting to EUR 1.30, we estimate the BoD to propose a DPS of EUR 0.70.

Outlook as a main interest
According to PM indices, US and Euro Area manufacturing might face declines in the coming months. However, a large recession in Europe seems much unlike with energy shortage resolved. Furthermore, Vaisala’s positioning provides some protection against the slowing economy with investments in renewable energy. For now, the record high order book provides some foundation for growth in H1’23, but the visibility into H2 is yet somewhat foggy. Vaisala has generally been quite conservative in giving its guidance; with the management’s 2023 outlook providing some growth, we foresee the company having good trust/visibility for the full year. Moreover, component availability is set to improve which should provide some lifting support for EBIT.

HOLD with a target price of EUR 41.0
We revised our W&A’s near-term estimates, reflecting a better-than-expected market outlook. With our revised estimates, Vaisala trades approx. in line with its peer group, even below by considering 2023-24 figures. With minor estimate changes, we adjust our TP to EUR 41.0 (40.0). Reflecting neutral valuation, we retain our HOLD-rating ahead of the Q4 result.

Open report

Q4 result should contain no surprises
Marimekko expects its 2022 revenue to grow and adj. EBIT margin to land between 17-20%. The growth rate already saw some decelerating in Q3 and came in at 4.0%. In Q4, we expect the company to post a y/y growth of 2.7%, with revenue amounting to EUR 49.4m. The growth is driven by int’l sales while we expect revenue in Finland to decline due to a lack of extraordinary wholesale deliveries. With cost pressures arising from higher material costs and elevated fixed costs, our Q4 adj. EBIT estimate falls below that of the comparison period, to EUR 6.4m (13.0% adj. EBIT margin). With 22E EPS amounting to EUR 0.59, we expect the BoD to propose a DPS of EUR 0.38 (~60% payout rate). Overall, we foresee that Q4 should contain no large surprises.

Navigating through a tough market
We foresee the expected slowing economic growth and inflation to have an impact on fashion spending in 2023 with consumers fighting against a decline in purchasing power. Inflation has also risen in one of Marimekko’s core markets Japan. We expect Marimekko’s strong brand to protect the demand for the company, even during harder times. Although, we expect topline growth to significantly slow down from the levels seen during the past few years. For 2023, we estimate y/y growth of 6.9%, with revenue amounting to EUR 179.0m. The topline growth is largely supported by int’l sales while we expect sales in Finland to grow only by 4% in 2023. We anticipate profitability to remain at strong levels, 23E EBIT margin amounting to 18.2%. Furthermore, with its new strategy, the company aims to improve its scalability and aims for a 20% adj. EBIT margin.

HOLD with a target price of 10.0
We made no changes to our estimates ahead of the Q4 result. Since our last update, Marimekko’s share price has improved by some 10% which in our view has changed the valuation neutral. The company currently trades with 23-24E EV/EBIT and P/E multiples of 13-11x and 16-15.5x respectively. We adjust our rating to HOLD (BUY) and retain a TP of EUR 10.0.

Open report

Less growth and more earnings this year

Pihlajalinna revised FY ’22 guidance down in Q4 as the factors which hit EBITA earlier in the year persisted. Capacity additions hurt earnings especially in H1, while certain cost inflation and productivity issues continued to weigh H2. Covid-19 services have also been missing, but other than that there have been no demand side issues. Organic growth has been robust, and the Pohjola Hospital acquisition helped the company grow at a high-teens rate in FY ’22. We make no changes to our Q4 estimates. We estimate 3% growth for FY ’23 and ca. EUR 10m profitability increase; we expect Pihlajalinna to guide flat growth and increasing EBITA for the year as the company is now done with its late capacity expansion and will focus on enhancing margins.

Capacity costs have been accompanied by other items

The two larger Finnish players, Mehiläinen and Terveystalo, had major issues last year despite strong growth. Mehiläinen, more than twice the size of Pihlajalinna in revenue, saw its profitability decrease by ca. EUR 35m due to many issues such as inflation and labor shortages. Pihlajalinna likewise has endured some cost inflation as well as labor issues due to both high sick rates and tight availability of recruits. The announced negotiations play their part in managing costs, while Pihlajalinna also divests its EUR 16m dental business, a small alleviation to the indebtedness issues. Price hikes prop top line in FY ’23, but we would also like to hear views on volumes. Public queues need to be dealt with, one area which could add volumes. Organic growth outlook is decent; there are minor top line headwinds due to the dental divestment as well as outsourcing restructurings, but these represent only ca. 5% of revenue and support margins.

Valuation unchanged and relatively undemanding

Pihlajalinna’s valuation, 14x EV/EBIT on our FY ’23 estimates, hasn’t changed in the past few months, while peer multiples have seen some gains. In our view the valuation leaves adequate upside potential as the roughly 5% EBIT margin we estimate for the year remains well short of the company’s long-term earnings potential. We retain our EUR 10 TP and BUY rating.

Open report

Good figures posted in Q4
Innofactor reported Q4 results in line with our expectations. Revenue grew 17.1% y/y (12.7% organically) to EUR 20.5m (Evli EUR 20.5m) while EBITDA and EBIT amounted to EUR 2.6m (Evli EUR 2.7m) and 1.8m (Evli EUR 1.9m) respectively. The order backlog stood at EUR 75.8m, up 4.1% y/y. Innofactor’s BoD proposes a distribution of EUR 0.06 per share as repayment of capital (Evli EUR 0.06). Innofactor’s 2023 guidance was not a surprise, expecting net sales to increase from 2022 (EUR 77.1m) and EBITDA to increase from 2022 (EUR 7.8m). Q4 figures were solid, considering also the EUR 0.4m deduction made in Q4 revenue due to uncertainty in receivables of a single project, without which the reported EBITDA -margin of 12.7% would have been boosted by some 1.5%p. 

Expecting top- and bottom-line growth in 2023 
On our largely unchanged estimates, we expect revenue growth of 6.4% in 2023, driven by the weak comparison H1 and a continued modest growth outlook. Innofactor has not noted any demand issues but the prevailing economic uncertainty in our view is nonetheless not to be disregarded. We expect EBITDA to improve to EUR 9.7m (2022: 7.8m) supported by the improved operational efficiency after H1/22 challenges, topline growth and improved sales mix, with the SaaS+license share of revenue up 3%p by year-end. The deduced revenue in Q4 can still materialize in 2023, providing some further potential improvement to figures. 

BUY with a target price of EUR 1.5 (1.25)
Current valuation levels in our view price in a flat earnings development at best, with implied 2022 P/E of ~13x, still clearly below peer 2022 and 2023e multiples. Some caution is however warranted, with Innofactor now having posted only two solid quarters after challenges before that. We adjust our TP to EUR 1.5 (1.25) and retain our BUY-rating.

Open report

Q4 EBIT likely to be a bit subdued after strong Q3

Finnair’s Q3 topped expectations as yields proved higher than estimated. High passenger revenues (some EUR 50m above estimates), helped by the seasonal strength of Q3, as well as income from wet leases translated into an adj. EBIT of EUR 35m (some EUR 40m above estimates). Q4 EBIT should have improved y/y but should be down somewhat q/q; passenger volumes are still recovering from the pandemic slump, but Q4 also includes slower periods and in the case of Finnair there’s the lack of North Atlantic volumes as certain routes have been missing after the summer months. We estimate Q4 revenue at EUR 679m and adj. EBIT at EUR 13m. We believe Finnair will not issue any specific guidance (beyond capacity and load factors) as the company and its main markets are still going through significant changes.

Volumes are still recovering while fuel prices have declined

Finnair now breaks out data for the Middle Eastern routes. The region, based on the initial figures, contributed 25% of the volume in January which Europe and Asia each lately turned out; we look forward to comments on how much these new routes might grow over the year. Finnair’s Asian volumes are now 50% compared to pre-pandemic levels, and even if China is only now opening it’s uncertain how much further the flows may grow as the Russian airspace stays closed. We also look forward to comments regarding ticket pricing as jet fuel prices began to decline in Q4. Jet fuel prices have declined especially in EUR terms (around 20% in the past 3 months) while there should still be significant pent-up travel demand following the pandemic.

Upside appears elusive for now despite lower fuel prices

We estimate 6% EBIT for FY ’24 vs Finnair’s target of at least 5% after H1’24. Lower fuel prices help airlines’ earnings and thus higher valuations are justifiable, however the pace of gains has been rapid in the past few months and sector multiples seem high. Some uplift may be warranted also in the case of Finnair, but the company trades 18x EV/EBIT on our FY ’23 estimates (vs 11x for a typical peer) and ca. 11x for next year (vs 8.4x). Our new TP is EUR 0.45 (0.40); our new rating is SELL (HOLD).

Open report

• Net sales in Q4 amounted to EUR 20.5m (EUR 17.5m in Q4/21), in line with our estimates (Evli EUR 20.5m). Net sales in Q4 grew 17.1% y/y and 12.7% organically. Net sales increased in Finland and Norway but declined in Sweden and Denmark. 
• EBITDA in Q4 was EUR 2.6m (EUR 1.7m in Q4/21, in line with our estimates (Evli EUR 2.7m), at a margin of 12.7%. 
• Operating profit in Q4 amounted to EUR 1.8m (EUR 0.5m in Q4/21, in line with our estimates (Evli EUR 1.9m), at a margin of 8.8%. 
• Order backlog at EUR 75.8m, up 4.1% y/y. New orders included an information management solution for the Finnish Defence Forces Logistics Command, approximately EUR 22 million (not yet in order backlog, slightly over half estimated to be entered in Q1/2023).
• Guidance for 2023: Innofactor’s net sales is expected to increase from 2022 (EUR 77.1m) and EBITDA is expected to increase from 2022 (EUR 7.8m).
• Dividend proposal: Innofactor’s BoD proposes a distribution of EUR 0.06 per share a repayment of capital (Evli EUR 0.06).

Open report

Q4 EBIT likely to be modest relative to Q3

Raute’s Q3 report was a positive surprise as Europe in particular drove top line EUR 8m above our estimate. The very high EUR 19m services revenue helped EBIT beat our estimate. Raute’s positive margin development is set to continue this year as the worst inflation shock has passed; Raute should have also learned to cope with inflation in project pricing. The Q3 report highlighted strong demand in North America and Europe (partly due to the Russian import gap), in addition to which there have been encouraging signs in Latin America and Asia. We expect stable Q4 EBIT development y/y while we estimate revenue down 14% y/y to EUR 38m. We estimate Q4 EBIT at EUR 0.7m, down from the EUR 1.4m Q3 figure as services revenue is unlikely to be that high this time due to a relative lack of modernization orders.

Profitability should heal over the course of the year

Russian order book was already down to EUR 6m at the end of Q3 and therefore the Q4 report should have no big news on that front, however we expect to hear an update on net working capital issues related to the cancelled Russian projects as well as recent component availability challenges. Raute’s guidance is always loose; we expect the company to guide improving (positive) EBIT for the year. A larger order could lift outlook further if demand remains strong over the course of the year.

Short-term downside seems limited, lots of EBIT potential

Raute should reach at least some modest positive EBIT in FY ’23 as inflation abates and the company achieves EUR 4-5m in annual savings. Favorable revenue (and mix) development could drive FY ’23 EBIT to a very decent level, although still likely well short of EUR 10m even in an optimistic scenario. We consider FY ’23 EBIT of ca. EUR 5m a realistic scenario. Raute may miss our base case estimate for FY ‘23 if Western demand begins to sour, but even in that case downside should be limited as there seem to have been no changes to Raute’s competitive positioning. We thus consider the 7x EV/EBIT valuation, on our FY ’23 estimates, undemanding. We retain our EUR 11 TP and BUY rating.

Open report

Improvement continues, but Q4 earnings remained very low

Suominen’s Q4 revenue landed at EUR 133m vs the EUR 140m/140m Evli/cons. estimates. Sales prices remained high, and the EUR 9m FX tailwind also helped, while Q4 volumes were flat q/q and y/y as US volumes continued to improve but not quite at the expected pace; raw materials deflation has led to some customer caution, in addition to which there have been manufacturing workforce shortages. The 5% gross margin, when adjusted for the EUR 4.8m hit in Italy, was a small improvement q/q but still clearly below our 10% estimate. Adj. EBITDA, at EUR 5.0m, came in below the EUR 11.8m/9.8m Evli/cons. estimates. FX lifted EBITDA by EUR 0.7m, while it lacked positive one-offs from the comparison period and was burdened by CEO change costs. Cash flow was strong as inventories and receivables declined q/q.

We estimate Americas revenue to grow by 13% in FY ‘23

Raw materials and energy prices continue to slide in Q1, which means Suominen’s pricing adjusts down in Q1 but slower than input costs. Meanwhile volumes and mix are improving; the US drives meaningful volume gains this year as especially H1’22 was challenging. Sustainable nonwovens’ growing share supports margins, but the relatively challenging European supply-demand balance in traditional products poses a headwind. We make some further small estimate cuts for this year; we estimate ca. 5% top line growth for the year, driven by double-digit growth in the US.

Focus rests on volumes over the coming quarters

H1’23 enjoys a favorable dynamic between falling input costs and relatively high (but already declining) nonwovens prices. The situation could extend to H2’23 if input costs continue to decline after the spring, but in our view margin gains are more likely to rely on improving volumes and mix after H1’23. FY ’23 results should thus demonstrate stabilizing profitability levels for Suominen after the rapid gains and declines seen in recent years. Suominen is valued below 5x EV/EBITDA and 9x EV/EBIT on our FY ’23 estimates, which we consider neutral levels since margins are likely to remain subdued especially during the early parts of the year. Our new TP is EUR 3.0 (3.5); we retain our HOLD rating.

Open report

Q4 results were strong

Net sales in Q4 were EUR 93.3m (EUR 82.6m in Q4/21), above our and consensus estimates (EUR 85.1m/86.0m Evli/cons.). Sales growth was impressive at 12.9% y/y. Operating profit in Q4 amounted to EUR 4.8m (EUR 3.0m in Q4/21), above our and consensus estimates (EUR 3.7m/3.4m Evli/cons.) at a margin of 5.2% (3.6%). We estimated improvement in profitability y/y as the comparison period was affected by poor performance of two regional business units, yet the published figures were even stronger than anticipated. The order backlog in Q4 was EUR 246.7m (EUR 218.6m in Q4/21), up by 12.8% y/y driven by strong order intake of EUR 109.1m in Q4 (Q4/21: EUR 66.9m). Consti’s BoD proposes a dividend of EUR 0.60 per share.

 

Positive development expected to continue

Consti expects that the operating result for 2023 will be in the range of EUR 9.5–13.5 million. We have made small adjustments to our forecasts, our current estimate for 2023 revenue is at EUR 315.2m (EUR 303.8m) and EBIT slightly above the guidance middle point at EUR 12.3m (EUR 11.6m). The estimate adjustments are driven by the company’s order backlog, easing cost inflation and volume growth. We still see potential margin pressure coming from salary cost inflation, on the other hand, the material cost inflation is clearly slowing down.

 

BUY with a target price of EUR 14.0 (13.0)

We continue to see the case attractive despite the recent share price strength. The company has shown its capabilities in a difficult market, and we expect the positive development to continue. The valuation is still rather undemanding when comparing to its key peers. In addition to the favorable relative valuation, we see the company’s dividend yield attractive at the current price levels. We adjust our target price to EUR 14.0 (13.0) with BUY-rating intact.

Open report

• Suominen Q4 revenue grew by 15.1% y/y to EUR 133.1m vs the EUR 140.0m/140.4m Evli/consensus estimates. Americas came in at EUR 81.7m, compared to our EUR 84.0m estimate, while Europe amounted to EUR 51.4m vs our EUR 56.0m estimate. Currencies had a positive impact of EUR 9.3m on sales.
• Gross profit was EUR 1.8m, compared to our EUR 14.0m estimate, and gross margin was therefore 1.4% vs our 10.0% estimate.
• Adjusted EBITDA landed at EUR 5.0m in Q4, compared to the EUR 11.8m/9.8m Evli/consensus estimates. Meanwhile adjusted EBIT was EUR -0.2m vs our EUR 6.8m estimate.
• Suominen guides its comparable EBITDA to increase in 2023 (EUR 15.3m in 2022).
• The BoD proposes EUR 0.10 per share dividend to be paid for the year, compared to the EUR 0.15/0.08 Evli/consensus estimates.

Open report

• Net sales in Q4 were EUR 93.3m (EUR 82.6m in Q4/21), above our and consensus estimates (EUR 85.1m/86.0m Evli/cons.). Sales growth was impressive at 12.9% y/y.
• operating profit in Q4 amounted to EUR 4.8m (EUR 3.0m in Q4/21), above our and consensus estimates (EUR 3.7m/3.4m Evli/cons.) at a margin of 5.2% (3.6%).
• EPS in Q4 amounted to EUR 0.49 (EUR 0.30 in Q4/21), above our and consensus estimates (EUR 0.36/0.33 Evli/cons.).
• The order backlog in Q4 was EUR 246.7m (EUR 218.6m in Q4/21), up by 12.8% y/y. Order intake was EUR 109.1m in Q4 (Q4/21: EUR 66.9m).
• Free cash flow amounted to EUR 10.4m (Q4/21: EUR 6.1m).
• The company’s order intake was impressive as it won multiple significant orders during Q4 such as Oulunkylä elementary school and kindergarten and Jorvi Hospital
• The profitability continues to be strong despite the cost inflation having a negative effect, the projects progressed as planned during the quarter and Consti did not experience such problems with projects as it did during Q4 2021
• Guidance for 2023: Operating result for 2023 will be in the range of EUR 9.5–13.5 million

Open report

Operatively quite as expected
CapMan reported operatively rather decent Q4 figures. The larger surprises came in the divestment of JAY Solutions (CapMan’s ownership 60%) and appointment of a new CEO. JAY Solutions was sold to Bas Invest for a consideration of EUR 8.5m at an attractive valuation of ~4x sales. CapMan, however, booked an EUR 2.6m goodwill impairment charge due to an accounting technicality relating to the option for the minority stake. As a result, EBIT came in softer than expected at EUR 7.5m (EUR 11.4m/9.6m Evli/cons.), adj. EBIT at EUR 10.1m. CapMan’s BoD proposed a dividend of EUR 0.17, a notch above expectations (EUR 0.16 Evli/cons.), for a dividend yield of ~6%. 

Outlook remains quite good
The overall fairly decent fundraising and transaction outlook does not appear to have changed at least for the worse in the past months. The fundraising activity is seeing some support from a rebound in previous investment decision making slowness, with recent development in some funds having been slower than expected. We expect similar operating profit levels in 2023 as in 2022. The expected larger negative is in fund returns, after a stellar comparison period. We expect the Management Company business to clearly improve mainly through increased carried interest while expecting the Services business to improve on an adj. basis through growth and divestment of the loss-making JAY solutions. 

BUY with a target price of EUR 3.2 (3.1)
CapMan in our view continues to convince despite some market softness. The market situation and an on our estimates higher expected share of more uncertain carried interest creates some uncertainty. With the not too challenging valuation level and the ~6% dividend yield the investment case remains attractive. We retain our BUY-rating with a TP of EUR 3.2 (3.1).  

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Good growth, profitability came down as expected
Q4 group net sales accounted for EUR 28.2m (27.4m/28.3m Evli/cons.), reflecting 14.1% y/y growth. The growth was supported by the strong performance of SBU and IBU, while MBU suffered from supply chain issues and a softer market. Gross margin slightly decreased from the comparison period with continued spot-component purchases. In addition, fixed costs faced notable increases and DT’s Q4 EBIT fell clearly short of last year. Q4 EBIT amounted to EUR 2.8m (9.9% margin). For the year 2022, the BoD proposes a dividend of EUR 0.20 which reflects 58% of the company’s net result.

Minor estimate adjustments made
We raised our 23E EBIT by some 2%, reflecting upgraded net sales estimates and the company’s comments on profitability development. However, we expect the scalability to kick in more prominently in 2024 with additional cost pressures easing and revenue growth continuing. Our 23E net sales estimate amounts to EUR 111.5m, reflecting y/y growth of 13.1%. We expect all DT’s businesses to show growth, especially SBU to perform strongly with aviation investments and gained market share. With strong topline growth, our 23 EBIT estimate lands at EUR 14.0m, reflecting an EBIT margin of 12.6% which yet falls short of the company's 15% target. There exists yet some tails from 2022 that deteriorate DT’s 23E profitability. However, in 2024, we expect DT to exceed its profitability target and record an EBIT margin of 15.2%.

SELL with a target price of EUR 16.5
With our 2023 estimates, DT continues trading above its peers. With small estimate revisions made, we adjust our TP to EUR 16.5 (16.0). We however still see the company as overvalued and hence retain our SELL rating. For a longer-term investor, we see DT as an interesting investment case with both topline and EBIT growth. 

Open report

Q4 was weaker than expected

SRV reported Q4 results which were below our estimates. Revenue amounted to EUR 181.2m (EUR 211.9m/214.0m Evli/cons.) and EBIT was EUR -6.3m (EUR 3.6/4.1m Evli/cons.). The company estimates that 2023 group revenue is lower and operative operating profit is positive but lower than in 2022. SRV also updated its long-term financial targets (by 2026): Revenue EUR 900m and operative operating profit margin 6%. In addition, SRV aims to distribute 30-50% of earnings as dividend.

 

Challenging market ahead

The current estimates point towards a slowdown for 2023 in the Finnish construction market driven particularly by decreasing housing construction volumes. The market conditions are starting to show in the company’s numbers as the housing construction backlog continued to decline and the company’s revenue for Q4 was affected by delays in project starts. In our view, SRV is well positioned for a difficult market as the company’s order intake in business construction was strong during the fourth quarter. In addition to the strong presence in the lower risk business construction contracting market, the company’s balance sheet is healthy after the financing arrangements completed during H1 2022.

 

HOLD with a target price of EUR 4.3

We estimate revenue to decline 13.7% y/y in 2023 driven by a lack of developer contracted housing units and lower residential construction volumes while seeing healthy conditions for business construction supported by backlog growth. Because of the estimated project mix, we have also lowered our margin expectations for 2023. In our view, the near-term upside is limited yet the valuation looks rather undemanding in the long-term. We retain our HOLD-rating and TP of EUR 4.3.

Open report

• Q4 group result: net sales grew by 14.1% y/y to EUR 28.2m, approx. in line with our and cons. estimates (24.7m/28.3m Evli/cons.). The growth was driven by strong demand for industrial and security solutions, while medical BU saw some softness during the period. EBIT of EUR 2.8m came in above our and cons. estimates (2.5m/2.6m Evli/cons.), but clearly below that of the comparison period. EBIT was negatively impacted by cost inflation arising from spot-component purchases, R&D, and logistics as well as personnel expenses. EBIT margin was 9.9%. EPS accounted for EUR 0.16, beating our expectations (0.13/0.15 Evli/cons.).
• Medical (MBU): mainly driven by softer market and supply chain issues, MBU’s net sales decreased by 6.6% y/y to EUR 12.7m (Evli: 13.5m). According to the company’s management, the underlying long-term demand outlook for MBU is positive.
• Security (SBU): with strong underlying demand for CT and line-scan security equipment, SBU’s net sales grew by 41% y/y to EUR 10.9m, topping our expectations (Evli: 9.8m). DT gained new customers during the period.
• Industrial (IBU): IBU’s net sales grew by 34.5% to EUR 4.6m, beating our estimates (Evli: 4.1m). The strong performance was supported by improved delivery capabilities and new customers gained during 2022.
• The BoD proposes a DPS of EUR 0.20 (0.19/0.21 Evli/cons.) for the fiscal year 2022.
• Outlook: DT expects group net sales and all its BUs to grow by double-digits in Q1 and H1’23. Outlook for medical solutions came in above our expectations, forcing some upward pressure on our 2023 estimates. DT anticipates not achieving its profitability target in 2023 yet, but says it’s on its way toward an EBIT margin of 15%. Long-term targets intact: at least 10% annual growth and 15% EBIT margin.

Open report

• Revenue in Q4 was EUR 19.7m (EUR 14.7m in Q4/21), in line with our and consensus estimates (EUR 19.8m/18.9m Evli/Cons.). Growth in Q4 amounted to 34% y/y.
• Operating profit in Q4 amounted to EUR 7.5m (EUR 12.2m in Q4/21), below our estimates and consensus estimates (EUR 11.4m/9.6m Evli/cons.). An EUR 2.6m impairment of goodwill related to the disposal of the JAY Solutions business was booked, adj. operating profit was EUR 10.0m.
• EPS in Q4 amounted to EUR 0.03 (EUR 0.06 in Q4/21), below our estimates and consensus estimates (EUR 0.06/0.05 Evli/cons.).
• Management Company business revenue was EUR 17.1m vs. EUR 16.0m Evli. Operating profit EUR 7.6m vs. EUR 6.7m Evli. Carried interest EUR 4.1m (Evli 4.0m)
• Revenue in Investment business in Q4 was EUR 0.0m vs. EUR 0.0m Evli. Operating profit in Q4 amounted to EUR 3.7m vs. EUR 4.8m Evli. 
• Revenue in Services business in Q4 was EUR 2.4m vs. EUR 3.3m Evli. Operating profit in Q4 amounted to EUR -1.9m vs. EUR 1.7m Evli. 
• Dividend proposal: CapMan proposes a dividend of EUR 0.17 per share (EUR 0.16/0.16 Evli/Cons.).
• Capital under management by the end of Q4 was EUR 5.04bn (Q4/21: EUR 4.9bn). 
• Pia Kåll appointed as CEO of CapMan, current CEO Joakim Frimodig to become full Chair of the Board.

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Supply chain issues to cut MBU’s growth in Q4
In its pre-silent call, DT’s management indicated that additional supply chain issues have caused some challenges to MBU’s deliveries. To our understanding, these challenges concern especially China, in which DT holds a strong position in medical solutions. Such issues are expected to have a significant impact on MBU’s growth prospects and thus we have revised our Q4 MBU topline estimates downwards. We now expect MBU’s Q4 net sales to decrease by 0.4% y/y to EUR 13.5m. We expect the situation not to limit in Q4’22 and MBU’s growth to see some softness also in Q1’23.

SBU and IBU to perform well
We don’t expect MBU’s situation to reflect in the performance of SBU and IBU since MBU operates mainly with a separate supply chain. In addition, the underlying demand for security solutions is currently high. In Q4, we expect SBU to grow by 26.4% to EUR 9.8m and IBU to increase by 20.2% to EUR 4.1m. In our view, SBU’s growth is largely supported by increased investments in aviation. Moreover, we see IBU facing solid momentum that results in recently won customers despite uncertain macroeconomic trends. In total, DT’s Q4 revenue will face a 10.9% y/y growth, amounting to EUR 27.4m (prev. 28.7m).

SELL with a target price of EUR 16.0 (16.5)
Continued spot-component purchases deteriorate DT’s profitability to some extent, despite the company being able to transfer some of the increased material costs to customer prices. We expect Q4 EBIT to amount to 2.5m (prev. 2.8m), reflecting a 9.2% margin. The company also faces cost pressures originating from fixed costs. With our revised estimates and recent rally in stock price, DT’s valuation turns expensive. We downgrade our rating to SELL (HOLD) and adjust TP to EUR 16.0 (16.5) ahead of the Q4 result.

Open report

On track with set out expectations for 2022
Fellow Bank’s development during H2 has progressed in line with expectations set out earlier. The loan portfolio at the end of 2022 was at EUR 159.9m (target > EUR 150m). Deposits amounted to EUR 246.8m, showing an expected more modest growth. The provided funding amounts on a monthly level have also showed a slight positive trend, with the monthly average (R3m) near EUR 28m. Actions to strengthen equity were also completed as expected with the issue of an EUR 6.1m debenture loan during the fall.

Market environment development positives and negatives
The interest rate environment and macroeconomic uncertainties bring some added flavour to the mix, the effects of which we currently view as slightly net negative for Fellow Bank. The effect on near-term expected net interest income is positive, although the higher interest rates on deposits and current loan portfolio to deposit ratio reduces some of the positive impact. The interest rate hikes coupled with the macroeconomic uncertainties, however, increase the uncertainty in the growth of funding volumes going forward. The effects so far appear to have been mostly visible through somewhat stricter lending policies and higher loan loss provisions, but we foresee some increases in competition through pricing going forward.  The overall financial impacts on our estimates for the coming years are not substantial through the higher expected interest income and somewhat lower growth and higher loan loss expectations. 

HOLD with a target price of EUR 0.40
Fellow Bank’s investment case relies on the growth of its loan book in the coming years and the benefits of scalability. The current outlook has in our view slightly weakened, and we adjust our target price to EUR 0.40 (EUR 0.42), HOLD-rating intact.

Open report

Steady performance expected to continue in Q4

Consti reports its Q4 results on February 3^rd. The company’s performance has been steady during the first nine months, and we expect that the development has continued during the last quarter. We estimate revenue growth of 2.8% for Q4 driven by slightly higher backlog burn yet lack of inorganic growth when comparing to Q4 2021. Consti estimates that the EBIT for FY will be in the range of EUR 9-13 (EUR 2.4-6.4m implied guidance for Q4). Our estimate for FY EBIT stands at EUR 10.3m (EUR 3.7m for Q4), slightly below the middle point of the guidance. We expect that the company can improve its relative profitability y/y despite the cost inflationary environment as Q4 2021 was affected by two regional business units with poor profitability.

 

Renovation market is expected to grow slightly in 2023

Despite the anticipated decrease in new construction, the Finnish renovation construction volumes are predicted to experience a slight increase in 2023. The Confederation of Finnish Construction Industries RT predicts that renovation output will increase by 2% in 2023. We currently forecast revenue growth of 2.2% and EBIT margin of 3.8% for 2023, we expect the company's growth to continue, though at a slightly slower pace due to a lack of inorganic growth. However, margins are predicted to improve as a result of higher volumes and slowing cost inflation. Consti’s backlog is still at healthy levels and the company has been able to win projects especially on non-residential renovation. The demand for renovations by housing companies in 2023 is uncertain due to the high interest rates and renovation costs.

 

BUY with a target price of EUR 13.0 (12.0)

We have not made any adjustments to our estimates. Due to higher peer group multiples, we adjust our target price to EUR 13.0 (12.0) with BUY-rating intact.

Open report

US volumes recover while raw materials prices decline

Suominen’s Q3’22 top line recovered a lot even when its early part remained difficult in the US. We expect the continued rebound to have helped Suominen grow 21% y/y to EUR 140m in Q4 revenue. We estimate Suominen’s raw materials prices to have declined by almost 10% q/q in Q4, which together with higher delivery volumes and relatively stable sales prices should have helped the company to a significant profitability improvement not only q/q but also y/y. We estimate Q4 EBITDA at EUR 11.8m. USD has lately weakened by some 10% against EUR but is still relatively strong compared to year ago. We therefore believe the US business to drive growth also this year.

European volumes seem unlikely to grow much this year

Suominen plans to close another of its plants in Italy. European demand for traditional wipes is soft, while Turkish and Chinese imports have added a lot of supply within such segments, and the Mozzate plant isn’t positioned to produce sustainable nonwovens. Italy’s position is also challenging in terms of energy costs. The closure would result in EUR 9m in one-offs and EUR 3m in added annual EBITDA as utilization rates improve. Q4’22 and Q1’23 energy costs in Europe might prove to be a bit lower than feared due to the mild winter, whereas the situation in the US may have been more challenging relative to expectations. Suominen should guide at least some EBITDA improvement for this year as H1’22 comparison base is so weak, however the Q4 report might be a bit too early to give very strong guidance.

Valuation neutral, uncertainties around improvement pace

The closure and lower USD represent some estimate headwinds, but we would still expect Suominen to grow by at least a few percentage points this year. Suominen’s valuation (8x EV/EBIT on our FY ’23 estimates) is not very challenging as profitability continues to improve from the lows, driven by higher top line and lower raw materials prices, but valuation already reflects improvement while a lot of uncertainty remains around its pace. We update our TP to EUR 3.5 (3.0); our rating is now HOLD (BUY).

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Q4 figures clearly better than previously estimated

Enersense upgraded its FY ’22 guidance. Revenue should be around EUR 265m while adj. EBITDA will top EUR 12m. We had previously estimated relatively robust 8% top line growth for Q4’22, however we update our estimate to 31% ahead of the report. We saw Q4 EBITDA margin slightly below 2% but now update our estimate to 4.5%. The positive revision was driven by wind power projects, which proceeded ahead of schedule, yet our EUR 15m top line and EUR 2.6m profitability revisions suggest our previous estimates to have been cautious on other fronts as well. Organic growth outlook seems to be stronger than we previously estimated as each of the four segments appears headed for double-digit growth also this year.

High growth to continue even without the Voimatel deal

In our view Enersense is set to achieve significant earnings improvement in FY ’23 as inflation was a major challenge throughout last year, dragging profitability over the crucial summer months. Enersense has been negotiating inflation compensation for a while, the results of which are set to materialize with a lag, and this year inflation should prove much more modest whereas top line growth looks to remain in the double-digit territory. We note Connectivity has recently announced EUR 65m in contracts for the coming years. We estimate Enersense should be able to achieve roughly 200bps gains in operating margins this year. The Voimatel acquisition, should it go through, would help drive further operational improvement, but for now it’s still being processed by the FCCA.

FY ’23 figures and wind power projects could drive upside

Enersense continues to invest in growth this year, helped by the EUR 26m in proceeds from convertible notes. We have updated our FY ’23 EBIT estimate to EUR 11.4m (previously EUR 8.4m), on which Enersense trades roughly 10x. The valuation is not particularly challenging, especially relative to peers; the 3.8% EBIT margin we estimate also doesn’t reflect full profitability potential and hence earnings growth should continue next year. Our updated TP is EUR 7.0 (6.0) as we retain our HOLD rating.

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New strategy set
Solteq hosted its Capital Markets Day 2023 on January 18th, giving more insight into the recently set new strategy. Solteq had previously announced that it will operate under two new segments, Retail & Commerce and Utilities. Long-term growth and EBIT-% targets for the segments were set at 8%/8% and 15%/18% respectively. The company’s primary focus in the near-term will be on profitability, while also seeking to return on a growth path.

Near-term softness, building for the long-term
Solteq is heading into the new strategy period with a heavily renewed management team, including both new segments. For the short-term, Solteq reiterated the challenges faced in product development and macroeconomic headwinds. For the Utilities-segment, 2023 is expected to be a turn-around year, with ramp-up towards normalized operations and healthier financials towards H2/2023. In the Retail & Commerce-segment the growth ambitions in our view appear reasonable, although expectations in the near-term seem muted due to current headwinds. Newly appointed EVP Jesper Boye previously successfully headed Solteq’s business in Denmark and we see potential in future pan-Nordic growth. In our view the key takeaway from the CMD was the confirmation of Solteq’s own abilities and focus on near-term measures to build a much more capable Solteq towards the latter part of the strategy period.

HOLD with a TP of EUR 1.3 (1.2)
From a valuation perspective, the near-term remains subdued by challenges in the Utilities business. The significant upside potential in our view lies in the turnaround and tapping into the other Nordic countries, assuming the implementation of Datahub in Sweden. We adjust our TP to EUR 1.3 (1.2) due to a slight rebound in peer multiples, HOLD-rating intact.

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High-grade drill results from Pampalo

Endomines is currently extracting ore from the 755-815 level and have inferred resources (Pampalo deep) at the 815-875 level. The new drill hole intersected 6.0m grading 9.2g/t gold at the 1050 level, roughly 175-235m below the 815-875 level. The company has historically been able to produce approximately 20k ounces of gold per 50 meters at the Pampalo underground mine.

 

Probability of extending Pampalo Life of Mine increases

The results are based on a single drill hole and further drilling is needed to determine the economic feasibility of the mining area. Even though it is too early to determine if the company is able to economically extract the ore, the result confirms the continuation of the deposit. The gold was found in a location where the company expected, which shows that the mineralization continues according to the company’s previous expectations.  

 

HOLD with a target price of EUR 6.5 (5.4)

We have not made changes to our production estimates based on the published results. Our valuation for the company’s Pampalo mine is based on DCF which considers the ore reserves and resources between the 755-815 and 815-875 levels. The rest of the value is derived from a real option model which considers the possibility of Pampalo LoM increase. We have made adjustment to the real option model regarding the possible scale of the LoM increase. As a result of the changes to the model and the favorable gold price development, we increase our target price to EUR 6.5 (5.4), HOLD-rating intact.

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Finland’s leading renovation construction company
Consti is a construction service company focused on renovation construction and building technology contracting and services. The company operates solely in Finland with a focus on Finnish growth centers. Consti is the largest renovation construction company in Finland measured by revenue and the company’s building technology unit is the 5th largest building technology company in Finland.

Turnaround achieved amid uncertain market
During 2017-2018, Consti experienced challenges with project execution and management that resulted in negative earnings. Due to the suboptimal profitability, the company implemented corrective measures that began to show results already in 2019. The company has posted over 3% adjusted EBIT margin during 2020-2021. In 2022, the company has been able to maintain its profitability despite the rising construction material costs. In our view, the company’s long-term profitability target of 5% EBIT margin is ambitious but we see potential for improvement through fixed cost containment, optimization of the sales mix, and improved project management and procurement.

BUY with a target price of EUR 12.0 (11.0)
We see the case attractive despite the current construction market uncertainty and the recent share price strength. In our view, the company’s valuation discount to its new construction focused peer companies is unjustified. We also see a strong long-term upside potential if the company can reach its long-term operational targets. We retain our BUY-rating and adjust our target price to EUR 12.0 (11.0).  

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Endomines raised gross proceeds of EUR 13m
The public offering of Endomines Finland was oversubscribed yet the company’s BoD did not exercise the one million share upsize option. Therefore, the gross proceeds from the offering stayed at EUR 13m, with EUR 4m paid in cash and roughly EUR 9m paid by setting of the outstanding receivables based on the convertible loans issued by Endomines Finland. The result of the offering was in line with our prior assumptions.

Financing secured, strategy implementation ahead
Despite the dilution effect from the offering, we see the completion of the offering positive for the investment case. The company has now resources to begin larger scale exploration activities in the Karelian gold line which is one of the company’s strategic focus areas. The funding also allows management to focus on wider strategy implementation such as ramping up the Karelian gold line gold concentrate production and partnerships and/or asset sales in the United States. In addition, the company’s annual financing costs decrease as part of the offering is paid by convertible note conversion.

HOLD with a target price of EUR 5.4 (SEK 59)
Our view of the company remains largely unchanged from the previous update. Even though we see the completion of the offering as a great enabler for the company’s strategy implementation, we still see uncertainty regarding the successfulness of the company’s exploration activities and the value realization of the US assets. We update our target price to EUR 5.4 (SEK 59), HOLD-rating intact. 

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Lowered 2022E EBITA-% from 12-14% to 9-10%
Netum issued a profit warning on December 15th. The guidance for growth of over 30% in 2022 remains intact, while the EBITA-margin estimate was lowered from 12-14% to 9-10%. There is evidently no clear sole reason for the lowered guidance, but a product of among other things slightly below expected top-line growth, recruitments, additional expenses incurred from organizational restructuring during H2 and wage and general cost increases. Project challenges or delays have not been an issue. Growth and demand have to our understanding overall remained good despite some softness within the more competed for “general” projects and in private sector demand. The high share of public sector clients and related solid demand and better prerequisites for transferring cost increases to the customer remain beneficial.

Margin improvement potential in our view remains intact
With the lowered guidance we have lowered our 2022 EBITA-% estimate to 9.6% and our sales growth estimate by some 3%p. We continue to see clear potential for double-digit EBITA-margins and the long-term target of 14% not overly ambitious. Uncertainty regarding 2023 is elevated but assuming that the demand situation continues to support top-line growth and among other things the challenges with Netum’s Cyber security business ease and savings from the organizational restructuring and acquisition synergies materialize, we expect margins to improve to 13% in 2023. Netum has continued active recruiting and although profitability challenges will likely somewhat affect growth ambitions, we continue to expect double-digit growth.

BUY with a target price of EUR 4.2 (4.5)
Netum’s investment case in our view remains supported by the public sector exposure and good demand in the area and margin potential and we have yet to identify any major weaknesses. We retain our BUY-rating but lower our TP to EUR 4.2 (4.5). 

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Endomines to raise gross proceeds of EUR 13m

Endomines seeks to raise gross proceeds of EUR 13m (SEK 141m). The 2.6 million new shares offered represents 38.9% of the current shares outstanding. The subscription price is EUR 5.00 (SEK 54.25 at the current FX rate). In case of oversubscription, the company’s BoD may increase the number of shares issued up to 3.6m shares with a one million share upsize option. The net proceedings from the issue (excl. upsize option) are roughly EUR 12.3m (SEK 134m). The company has received commitments from investors worth of EUR 12.2m in total (or roughly 94% of the total offering) of which roughly EUR 3.4m is paid in cash.

 

Proceeds used to fund exploration activities in Finland

Endomines updated its strategy earlier this year which set the company’s focus back to Finland. The company aims to conduct wide scale exploration activities in the Karelian gold line with a mid-term target of defining a deposit with more than one million ounces of gold resources. The proceeds of the issue are used for the implementation of the new strategy and especially for exploration activities along the Karelian Gold Line.

 

HOLD with a target price of SEK 59 (64)

We have adjusted the shares outstanding and net debt figures with an assumption that the offering will be fully subscribed. In addition, we have made changes to our estimates and the SOTP valuation. The favorable gold price development is outweighed by the dilution effect from the offering and the uncertainty regarding the successfulness of the company’s exploration activities, the value realization of the US assets and changes in the FX rates. We decrease our target price to SEK 59 (64), HOLD-rating remains intact.

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Q4 EBITA not to improve that much

Pihlajalinna downgraded its guidance. Top line will still increase substantially, but FY ‘22 adj. EBITA is to decrease relative to the EUR 37.3m comparison figure. The earlier guidance suggested flat EBITA, and we previously estimated the figure at EUR 36.5m. We revise our Q4 EBITA estimate down to EUR 9.0m and hence now see the FY ’22 figure at EUR 33.5m. We note the EUR 7.8m figure seen in Q4’21 was weighed down by some EUR 2m in extraordinary high service costs within complete outsourcing contracts, and hence Pihlajalinna should be able to achieve at least flattish y/y profitability development in Q4’22.

EBITA is bound to improve next year

Pihlajalinna has scaled up its capacity over the past year; volumes and revenue have followed pretty much according to plan. Pohjola Hospital burdened profitability in H1, while new clinic ramp-ups continued to drag Q3 results. Personnel absence-related costs moderated a bit in Q3 but were still EUR 1m. Lower Covid-19 services revenue was another headwind. Pohjola Hospital cost synergies have already been realized and the units are profitable, but there’s still work to be done in driving higher capacity utilization rates across the network and especially within high value-added categories such as surgery procedures. Demand continues at a high level and Pihlajalinna has scope to raise prices; in our view profitability is set to follow up with top line next year, however we revise our FY ’23 profitability estimates down by EUR 3m.

Uncertainty around FY ’23 improvement pace limits upside

We make no changes to our revenue estimates as in our view the update concerns the cost levels which have continued relatively high. Pihlajalinna is valued at 14x EV/EBIT on our FY ’23 estimates, which is still not a high figure relative to peers while we estimate the respective EBIT margin almost 300bps below peers’. Long-term potential should remain large, but uncertainty around costs limits upside at least in the short-term perspective. Our updated TP is EUR 10 (11); we retain BUY rating.

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Acquired Econia and adjusted 2022 guidance
Administer announced the acquisition of Econia Ltd. Econia is a company specialised in financial and HR administration and international services operating in 13 locations in Finland and in Fuengirola, Spain. Econia’s pro forma net sales and EBITDA in 2021 were EUR 19.1m and EUR 1.7m, with corresponding predicted 2022 figures at around EUR 25m and EUR 3m. Growth has been aided by acquisitions, but organic growth has to our understanding been solid. The debt-free purchase price of the acquisition is EUR 20m, of which EUR 18m is paid in cash at the time of closing, with an additional purchase price of max. EUR 4m to be paid by June 30th, 2025. The acquisition is funded by IPO proceeds and long-term debt of EUR 13m.

Back on track to achieve growth targets
In conjunction with the acquisition Administer adjusted its 2022 guidance for net sales to EUR 50-52m (prev. 47-49m) and the EBITDA-margin to 5.5-7.5% (5.0-7.0%). The adjustment is purely related to the completed acquisition and according to management no notable deviations in the underlying business have been seen from what was communicated in the H1 earnings release. The acquisition puts Administer well back on track to achieve its 2024 net sales target of EUR 84m, also providing an additional avenue for growth internationally. Econia will also aid near-term profitability and we expect Administer to move to double-digit EBITDA-margins in 2023. Reaching the 2024 target of 24%, however, still requires significant internal actions to improve efficiency.

BUY with a target price of EUR 3.6
Current valuation levels (0.6x 2023e EV/sales) continue to suggest essentially no expectations of improvement potential. We see continued support for margins picking up through acquisition synergies and improved efficiency, although we still find the 24% EBITDA-margin target challenging.

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Profitability is currently driven by flagship businesses
Vaisala introduced its W&E business area and its strategy more in detail at its investor event in Saclay, France. W&E aims for growth through its growing and emerging businesses while the profitability is currently driven by the flagship businesses, i.e., product and project sales in meteorological and aviation markets. W&E is a clear market leader in selected niche markets in its flagship businesses but the growth opportunities in named business areas are highly restricted. Vaisala continues to selectively invest in its flagship markets, but the growth potentials lie in the rest of its businesses.

From hardware to software
While in the past Vaisala was known for its highly accurate measurement hardware, a general trend in W&E’s growing and emerging businesses is an increased share of software which nowadays drives a significant part of the value-add. With certain acquisitions made during the past, Vaisala has gained access to technologies, such as Lidars and developer tools, with which it's aiming to gain an annual double-digit topline growth. Growing businesses consist of from-distance measurements, i.e., Lidar equipment as well as air quality solution and road weather and environmental solutions. Meanwhile, in its emerging businesses (Xweather), W&E provides only subscription-based data and solution services combining hardware and software. Xweather’s profitability potential is notable given its scalable platform, but the business is still in its early stages. The presentations of W&E’s growing and emerging businesses further strengthened our impression of W&E’s future potential from both growth and profitability perspective.

Investment case unchanged for now
Although W&E’s prospects seem bright now, the uncertainty concerning economic development keeps us cautious and we remain to wait for the company’s further comments on visibility to 2023. We currently expect low single-digit growth in 23 due to strong comparison periods as well as weakening economic conditions. With valuation remaining elevated and our estimates intact, we retain our HOLD-rating and TP of EUR 40.0.

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There were still many profitability headwinds in Q3

Pihlajalinna’s Q3 revenue was EUR 165m, compared to the EUR 167m/165m Evli/cons. estimates. The 17.5% growth was driven by corporate and private volumes, which grew strong also on an organic basis when considering the headwind from lower Covid-19 services revenue (e.g. surgical procedures grew 61%). The mix was tilted less towards public customers, where profitability improved within outsourcing agreements due to efficiency measures, than we estimated. Private clinic capacity ramp-up costs, in addition to lower Covid-19 revenue, limited profitability as fixed costs were high during the summer months. Personnel-absence related costs, at EUR 1.0m, were lower than before, however there’s still uncertainty as to how these will develop in Q4. The EUR 9.4m adj. EBITA missed our estimate by EUR 2.6m, while the EUR 7.3m adj. EBIT was EUR 2m below the consensus.

Q4 and FY ’23 EBITA are set to see meaningful gains

Pihlajalinna retained its guidance, which now implies ca. EUR 5m y/y EBITA gain for Q4. The comparison figure suffered a EUR 2m hit from high costs within complete outsourcing contracts, so Pihlajalinna should still be able to reach a steep y/y improvement especially when ramp-up costs are to no more burden Q4 that much. Q4 also has some favorable seasonal demand patterns going on, including influenza vaccines, and the capacity additions (high value-added categories like surgical services) should have a significant EBITA contribution throughout next year. Pihlajalinna’s growth strategy is focused on major Finnish urban regions and increasingly relies on remote service paths to drive procedure volumes. Pohjola Hospital cost synergies have been taken in and hence the focus there is also on driving higher volumes. Pihlajalinna has already made some upward pricing adjustments and the tailwind continues to support next year.

Uncertainty around improvement pace, yet plenty of upside

The capacity drive-up has lifted indebtedness, but Q4 should provide a clear demonstration of higher EBITA. Pihlajalinna is valued around 13x EV/EBIT on our FY ’23 estimates, where the 5.6% EBIT margin estimate is still well below peers’ and long-term potential. Our new TP is EUR 11.0 (12.5); retain BUY rating.

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Top and bottom line a bit shy but no major issues

Exel’s Q3 revenue was EUR 33.8m vs our EUR 37.5m estimate. The two largest regions, Europe and North America, continued to grow at a rate of some 5% y/y while Asia-Pacific declined by 6%. The largest customer segments landed close to our estimates, while relative softness within the smaller segments added up and hence Exel’s volumes were not quite as high as we expected. The relative lack in volumes also left the EUR 1.8m adj. EBIT muted vs our EUR 2.7m estimate. The summer months were quiet in terms of new orders however the levels have begun to improve over the autumn. Exel left its guidance unchanged; in our view Q4 EBIT is set to improve y/y as the comparison figure is low, while there should be potential for at least some improvement q/q.

Long-term CAGR should remain around 5-10%

Exel’s long-term drivers are in place as before and we believe the company has been able to find the right types of customer accounts. The 6.7% adj. EBIT margin seen this year is not too bad, yet there should be plenty of upside left beyond that level. The consolidation of the two Chinese plants yields annual cost savings of EUR 0.7m, while wind power is likely to remain an important driver next year. The Indian JV may prove useful in this respect. The 24% growth seen last year was a rate very difficult to sustain for long, and Exel’s top line may not grow much this year, but in our view Exel’s accounts should still support long-term CAGR of some 5-10%. Such rates, combined with further margin upside, mean there’s still meaningful EBIT potential left.

Valuation not demanding even if growth slows a bit

Exel is valued at slightly above 8x EV/EBIT on our FY ’23 estimates, which is not a particularly high level considering our respective 7.5% EBIT margin estimate is well below the long-term benchmark level of 10% the company has been able to touch on a few occasions with significantly lower top line. In our view Exel’s key customer accounts could help the company grow even in a more challenging macro environment, however short order visibility is one factor limiting earnings multiples potential. We update our TP to EUR 6.5 (8.5) and retain our BUY rating.

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• Pihlajalinna Q3 revenue was up 17.5% y/y to EUR 165.2m, compared to the EUR 166.8m/164.9m Evli/consensus estimates. Organic growth was 3.3%. Corporate customers landed at EUR 52.8m vs our EUR 51.2m estimate, while private customers amounted to EUR 23.9m vs our EUR 21.4m estimate. Public sector customers were EUR 106.3m, compared to our EUR 111.9m estimate. Private clinic customer volumes grew 47% y/y (16% on an organic basis), while remote services use increased by 34%.
• Covid-19 services revenue amounted to EUR 2.3m, a decrease of EUR 9.5m y/y. Organic growth would have been 10.0% without Covid-19 services.
• Adjusted EBITDA was EUR 18.9m vs the EUR 20.5m/20.3m Evli/consensus estimates, whereas adjusted EBITA was EUR 9.4m vs our EUR 12.0m estimate. Adjusted EBIT landed at EUR 7.3m, compared to the EUR 10.0m/9.2m Evli/consensus estimates. Sickness-related personnel absences caused operational challenges and cost some EUR 1.0m in Q3. The costs of public services within complete outsourcing agreements also remained at a fairly high level.
• Pihlajalinna guides FY ’22 revenue to increase substantially and adjusted EBITA to be on a par with 2021 (unchanged).

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Growth and new orders, inflation still a major issue

Eltel’s Q3 revenue grew 7% y/y to EUR 207m vs the EUR 202m/201m Evli/cons. estimates. We find the top line beat was attributable to Norway, which grew 16%. Eltel has recently announced many new contracts, one-third of which are new business, and the EUR 406m orders will help EBIT to bottom out especially when they reflect higher costs. Inflation will, however, have a negative effect of more than EUR 10m this year. Q3 produced an EBIT of EUR 4.1m vs the EUR 3.2m/3.4m Evli/cons. estimates. The inflation challenge may already be easing a bit, but there are additional challenges such as employee turnover. Certain new projects may also come with a learning curve; e.g. Norwegian Q3 profitability was negatively impacted by the mix shift to more remote and smaller Communication projects.

Demand should support high single-digit growth rates

The Q3 report produced no big surprises in the sense that demand was known to be high, as highlighted by the many new contract announcements (further Power agreements have been announced after Q3). Customer investment levels are rebounding after the pandemic, but inflation is more widespread than previously estimated and its precise effect on 2-3 year-long frame contracts is hard to anticipate. Employee turnover is a particular problem in Sweden, but labor shortage issues extend to other countries as well. Profitability development hence remains highly uncertain for at least a couple of more quarters. Long-term demand and profitability drivers are in place like before for both Power and Connectivity. Eltel also announced its aim to capture 10% of the Finnish wind power market by 2025.

Valuation unchallenging from long-term margins view

Valuation isn’t very challenging as EBIT is bottoming out this year, while growth and inflation compensation are likely to drive margins for at least a couple of years. Growth should continue at high single-digit rates from Q4 on, yet we find the 11x EV/EBIT valuation, on our FY ’23 estimates, still neutral relative to peers. Eltel’s EBIT potential extends beyond that, and the 6x EV/EBIT on our FY ’24 estimates isn’t expensive but remains too far in the future. Our new TP is SEK 7.0 (9.0); we retain our HOLD rating.

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• Exel Q3 revenue grew by 1% y/y to EUR 33.8m vs our EUR 37.5m estimate. Growth was driven by North America while sales also increased in Europe.
• Wind power landed at EUR 8.0m vs our EUR 8.0m estimate, while Buildings and infrastructure was EUR 7.8m vs our EUR 8.3m estimate. Equipment and other industries amounted to EUR 5.6m, compared to our EUR 6.0m estimate. Growth was particularly strong within Transportation.
• Adjusted EBIT amounted to EUR 1.8m, compared to our EUR 2.7m estimate. The US unit performs at a better level compared to last year while Exel has succeeded quite well in transferring inflation to its prices.
• Order intake was EUR 24.5m during Q3, in other words flat y/y.
• Exel guides FY ’22 revenue to be at last year’s level and adjusted EBIT to increase compared to previous year (unchanged).

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Telko and Leipurin close to estimates, ESL drove the beat

Aspo’s EUR 160m in Q3 revenue and EUR 13m adj. EBIT were both roughly 15% above the respective Evli/cons. estimates. Telko and Leipurin developed relatively close to our estimates, at least in terms of profitability, while ESL’s continued strong performance explained a large part of the earnings beat. ESL has improved a lot in recent years due to both better operational efficiency and market conditions; the latter factor may not provide much more tailwind going forward, while the former still has potential especially in the long run. ESL’s niche positioning means overall cargo demand and pricing environment remains stable even if global spot markets have recently softened. Telko had already close to zero EBIT contribution from Russia and Belarus while the respective top line declines were roughly 40-50%. Leipurin exit process may lag that of Telko a bit, but Aspo’s key figures are already relatively clean of Russia.

ESL and Telko Q3 figures are high but largely sustainable

Telko’s Western EBIT has remained strong y/y and q/q thanks to its focus on more value-added categories. Telko’s EUR 3.7m Q3 EBIT implies an annual run-rate of close to EUR 15m; in our view the current market environment is more likely to soften than strengthen, but for now Telko’s demand and pricing situation stays relatively stable. We continue to estimate Telko’s FY ’23 EBIT at above EUR 13m. ESL has further long-term tailwinds thanks to its specialized positioning as a critical Baltic player; improved route optimization could still support EBIT in the short-term despite high comparison figures, while the hybrid vessels and their pooling will naturally add to long-term EBIT potential. We expect only a small ESL EBIT decline for FY ’23.

Telko H1 figures imply above EUR 10m EBIT gap for FY ‘23

We estimate Q4 EBIT at EUR 12.1m and believe Aspo is headed close to the upper end of its current guidance range. FY ’23 EBIT is thus very likely to decline after an extraordinary year. We make very little changes to our respective EUR 44.5m estimate. We still don’t view Aspo’s current EV/EBIT multiples of around 8x that challenging. We retain our EUR 9.5 TP and BUY rating.

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Decent Q3 result, EBIT below market expectations
Marimekko posted solid Q3 figures. Although, due to strong comparison figures both the top- and bottom line fell short of expectations. Group net sales grew by 4% y/y to EUR 44.1m driven by strong int’l sales and good growth in domestic retail sales. Domestic net sales declined by 7% y/y while int’l sales increased by 28% y/y mostly driven by strong development of the APAC region. Increased logistics costs pressed the gross margin slightly below that of the comparison period. Moreover, fixed costs saw some pressure through elevated personnel and IT-related costs which caused Q3 EBIT to fall below the comparison period. Q3 EBIT amounted to EUR 11.1m, reflecting an EBIT margin of 25.2% which was still on a great level.

Market might challenge the company's increased ambitions
Marimekko renewed its strategy for 2023-27 and consequently raised its growth target to 15%. Currently, against the company's growth ambitions, we see low consumer purchasing power and slowing economy support rather single- than double-digit growth seen during the recent years. On the other hand, increasing brand awareness should support the demand also during uncertain times. We expect the company to perform operatively well in a weaker market driven by lessons learned during the pandemic, but we estimate the demand for Marimekko’s offering to see some slowdown. For that reason, we expect the company not to reach its growth target in the coming years.

Valuation remains favorable
We lowered our estimates, driven by higher-than-expected cost pressures. Despite decreased EBIT estimates, we see upside potential in Marimekko’s current valuation. Currently, Marimekko is valued with 23E EV/EBIT of 11x while we, with our new target price, value the company with a corresponding multiple of 12x. Reflecting estimate adjustments, we adjust our TP to EUR 10.0 (prev. 12.0). With a moderate valuation, we retain our BUY-rating.

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• Aspo Q3 revenue landed at EUR 160.1m vs the EUR 141.8m/143.5m Evli/consensus estimates.
• Adjusted EBIT amounted to EUR 13.0m, compared to the EUR 11.3m/11.1m Evli/consensus estimates.
• ESL Q3 revenue was EUR 65.0m vs our EUR 59.8m estimate, while EBIT amounted to EUR 9.7m, compared to our EUR 8.2m estimate. Contract traffic demand remained strong over the quarter while there was some softening in spot market rates towards the end of Q3, the energy industry being an exception.
• Telko revenue amounted to EUR 60.5m, compared to our EUR 56.7m estimate. Comparable EBIT stood at EUR 3.7m vs our EUR 3.8m estimate. Plastics prices declined, especially within volume plastics, while chemicals prices declined during Q3 but stabilized towards the end of the quarter.
• Leipurin top line was EUR 32.3m vs our EUR 25.3m estimate, while EBIT landed at EUR 0.6m vs our EUR 0.8m estimate.
• Other operations cost EUR 0.9m, compared to our EUR 1.5m estimate.
• Aspo guides comparable EBIT to be EUR 52-57m in FY ’22 (unchanged).

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• Eltel Q3 revenue grew by 7% y/y to EUR 207.0m vs the EUR 201.8m/201.3m Evli/consensus estimates. Growth was attributable to Norway, Sweden and Finland while Denmark remained flat. Eltel also signed agreements worth a combined EUR 406m during the quarter, including one of Eltel’s largest fiber contracts ever. Workforce shortages are an issue, however high demand also helps to increase prices in tender offers.
• EBIT landed at EUR 4.1m, compared to the EUR 3.2m/3.4m Evli/consensus estimates. Operative EBITA was EUR 4.1m, compared to our EUR 3.3m estimate. Profitability was burdened by increased costs and low utilization due to high sick-leave rates and employee turnover, while administrative costs were lower than in the comparative period.
• Finland’s profitability remained flat y/y and was helped by a solid performance in Communication. Swedish and Danish profitability levels also remained roughly flat, while margins in Norway declined due to a change in production mix.
• Eltel does not provide guidance for FY ’22.

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• Group result: Marimekko’s net sales came in slightly below expectations and grew by 4% y/y to EUR 44.1m (45.0/45.3m Evli/cons.). The growth was driven by both Int’l sales and retail sales in Finland. Adj. EBIT was clearly below our expectations and amounted to EUR 11.1m (25.2% margin) (13.0/12.3m Evli/cons.). Profitability was negatively affected by elevated fixed costs (increased IT-investments and personnel costs) and weaker gross margin (increased logistics costs and elevated discounts).  In turn, the profitability was supported by favorable sales-mix and pricing. EPS amounted to EUR 0.22 (0.25/0.24 Evli/cons.).
• Finland declined by 7% y/y to EUR 26.7m (Evli: 29.1m) due to weaker wholesale deliveries which the company was already guided. However, retail sales saw solid 10% growth.
• Int’l grew strongly by 28% y/y to EUR 17.4m and came in above our expectations (Evli: 15.9m). The growth was supported by retail and wholesale sales in the APAC region as well as abnormal wholesale deliveries compared to Q3’21. The growth was also strong in Scandinavia and EMEA region.
• 2022 outlook: Domestic sales are expected to grow, but wholesale deliveries to be below that of the comparison period. The APAC region and international sales are expected to increase clearly on the comparison period. In total, net sales are expected to grow, but the growth pace to slow down in H2’22. Licensing income is expected to be above comparison period.
• FY22 guidance intact: expecting net sales to grow and an EBIT margin between 17-20%.
• Analyst comment: Although the result came in below our expectations, the rate of int’l sales growth surprised us positively which we see crucial for Marimekko’s long-term success.

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High growth to have continued in Q3, EBITA flat y/y

Pihlajalinna grew strong in Q2, due to organic and inorganic growth within corporate and private customers, and we wouldn’t expect Q3 to have been much different in this respect. Capacity has increased a lot over the past few quarters, while Q3 still saw an increase albeit a more marginal one. Demand has kept up with the supply increases, and this should continue to be the case going forward even with self-paying private customers as Pihlajalinna is the lowest cost provider; the company has done some price hikes earlier this year, while prices are to rise further in H2 and especially within private customers next year. We don’t thus expect the inflationary environment to pose major hurdles as Pihlajalinna should be positioned to find compensation for e.g. higher energy costs (which are often not that significant except for certain specialty practices). We estimate Q3 revenue to have grown 19% y/y to EUR 166.8m and see EBITA at EUR 12.0m.

Q4 EBITA should see a significant y/y increase

We don’t expect EBITA to have yet increased y/y, despite high growth and positive results from Pohjola Hospital, as we understand employee sick leave rates to have remained relatively high in Q3 although a bit more moderate than in H1. We continue to expect further improvements in capacity utilization rates to drive Q4 EBITA to a gain of some EUR 3m y/y. Our H2 EBITA estimate is in line with guidance; we don’t expect Pihlajalinna to make changes to its guidance at this point, but in our view Q4 results could still end up driving FY ’22 EBITA higher than the current guidance implies. In any case, longer term earnings drivers are in place; Pihlajalinna has plenty of margin potential left as demand picks up while Pohjola Hospital continues toward above 20% EBITDA margins.

Valuation very much on the undemanding side

Pihlajalinna is unlikely to make further M&A moves in the short and medium term as organic growth potential remains plentiful. The 12x EV/EBIT valuation, on our FY ’23 estimates, isn’t challenging as we estimate the margin at 6%, still well below many peers. We retain our EUR 12.5 TP and BUY rating.

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Operatively good quarter, bottom-line below estimates
Etteplan reported operatively good Q3 results. Net sales in Q3 were EUR 80.3m (EUR 78.1m/78.4m Evli/Cons.), with growth of some 20% y/y (12.0% organic excl. FX). EBIT amounted to EUR 5.8m (EUR 4.7m/5.2m Evli/cons.) and some EUR 6.5m excl. one-offs (Evli EUR 5.7m). Bottom-line figures were below our expectations, as financial items relating to the Semcon offer were clearly larger than anticipated. As a result, despite the better operating performance, EPS was negative at EUR -0.03 (EUR 0.04/0.01 Evli/cons.). Etteplan adjusted it guidance, expecting revenue of EUR 345-360m (340-370m) and EBIT of EUR 28-31m (28-32m).

Taking growth ambitions down a notch
Etteplan’s comments related to the market outlook were slightly on the negative side. Further softness is seen in China and Etteplan has also pre-emptively taken a more conservative approach to recruitments. Expectations are still good for the remainder of the year and signs of a significant decline in demand remain somewhat limited, although fluctuations in different customer segments are high and visibility going forward is lower. Our 2022 operative estimates are slightly up given the better than anticipated Q3 figures, currency hedging still poses a risk for the bottom line. We have also slightly lowered our estimates for the coming years based on an anticipated slow-down in growth.

HOLD (BUY) with a target price of EUR 13.5 (15.0)
Uncertainty going forward is clearly increasing, and although we for now do not see a reason to interpret the company’s comments in Q3 as indicative of any major downswing, some added caution is warranted. We lower our TP to EUR 13.5 (15.0) and our rating to HOLD, valuing Etteplan at ~14.0x 2023e P/E.

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Not many surprises while order backlog is now tall

Q3 revenue was EUR 64.4m vs our EUR 65.4m estimate. The 10.5% y/y growth was driven by all segments except Smart Industry, where the lower volumes of the OL3 project left a gap soon to be filled by the EUR 200m Helen contract. Low volumes, inflation, and Offshore ramp-up hurt margins, while the segment’s EBITDA gained from EUR 2.1m in items due to a capital gain as well as a change to the considerations related to an acquisition. Enersense’s headline EUR 4.3m EBITDA was above our EUR 2.0m estimate, but in line considering the one-offs. There were some items, such as Power’s costs with Megatuuli, which weren’t there to burden the comparison period. Connectivity EBITDA increased, however orders remained muted for now as top line is driven by long-term agreements, some of which should be signed soon. Meanwhile Power backlog doubled.

Both organic and inorganic growth to be seen

We would expect Enersense’s organic growth to help it reach healthy profitability levels in FY ’23, while the Baltics are likely to continue to dilute margins for a while. The Voimatel deal’s EUR 130m revenue and EUR 4m EBITDA, at an EV of EUR 10m, would add a lot of value with significant cost synergies but is yet to be approved by the competition authorities. The expansion to EV charging technology is another strategic addition. The initial Unified Chargers price tag is negligible, while it remains to be seen just how much value the deal will add (competition includes e.g. Kempower). The ERP project will continue next year while Offshore projects should begin to contribute then.

Q4 margins uncertain, but bound to get better next year

In our view Enersense is positioned for at least a high single-digit growth next year. Enersense’s guidance suggests there’s still a lot of uncertainty around Q4 profitability, in our view due to inflation and the fact that seasonal project patterns have been different this year. Enersense is valued some 5x EV/EBITDA and 10x EV/EBIT, which are not high levels compared to peers while there remains uncertainty around the improvement pace. We retain our EUR 6.0 TP and HOLD rating.

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• Net sales in Q3 were EUR 80.3m (EUR 66.9m in Q3/21), slightly above our estimates and consensus estimates (EUR 78.1m/78.4m Evli/Cons.). Growth in Q3 amounted to 20% y/y.
• EBIT in Q3 amounted to EUR 5.8m (EUR 4.7m in Q3/21), above our estimates and consensus estimates (EUR 4.7m/5.2m Evli/cons.), at a margin of 7.2%.
• EPS in Q3 amounted to EUR -0.03 (EUR 0.14 in Q3/21), below our estimates and consensus estimates (EUR 0.04/0.01 Evli/cons.).
• Net sales in Engineering Solutions in Q3 were EUR 41.9m vs. EUR 40.1m Evli. EBITA in Q3 amounted to EUR 4.3m vs. EUR 3.7m Evli. 
• Net sales in Software and Embedded Solutions in Q3 were EUR 22.0m vs. EUR 22.0m Evli. EBITA in Q3 amounted to EUR 2.2m vs. EUR 2.0m Evli. 
• Net sales in Technical Documentation Solutions in Q3 were EUR 16.3m vs. EUR 15.9m Evli. EBITA in Q3 amounted to EUR 1.3m vs. EUR 1.5m Evli. 
• Guidance for 2022 (specified): Revenue is estimated to be EUR 345-360m (EUR 340-370m) and the operating profit is estimated to be EUR 28-31m (EUR 28-32m)

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High passenger yields drove a revenue and EBIT beat

Finnair’s Q3 revenue reached EUR 719m, clearly above the EUR 645m/667m Evli/cons. estimates as passenger revenues were some EUR 50m higher than we estimated. Seasonally strong Q3, including EUR 56m in other operating income mostly attributable to wet leases, coupled with improving unit revenues helped Finnair’s EBIT to EUR 35m vs the EUR -7m/-4m Evli/cons. estimates. In our view the top line and EBIT beats were driven by higher than estimated passenger yields. The positive EBIT was an important milestone for Finnair, but there’s still distance left to go until profitability reaches a firm footing.

Improvement to continue, but not as steep as in Q3

Q3 EBIT was a major improvement q/q as passenger yields increased by some 10% over Q2. Q4 will be a bit softer in terms of volumes; October bookings look good, but November is seasonally soft before December’s seasonal travel volumes. We estimate 5% q/q passenger yield decline for Q4, but high jet fuel prices should still provide some ticket pricing tailwind in addition to a rebound in corporate travel, which has reached around 80% of the pre-pandemic level when adjusted for capacity. Meanwhile Finnair’s strategy includes efforts to secure high unit revenues (e.g. the share of direct distribution has already roughly doubled to 60%). Passenger yields are therefore likely to stay relatively high, but there’s also uncertainty around next year’s passenger volumes as China’s opening may be further delayed.

Valuation well anticipates long-term improvement

There’s a lot of uncertainty around factors such as yields, volumes as well as costs (including fuel prices) going forward. Finnair should achieve a positive FY ’23 EBIT, but it’s likely to be muted due to a certain lag in passenger volumes and wouldn’t in any case be enough to justify current valuation, which still isn’t cheap. Finnair’s valuation seems based on the assumption that it will eventually catch up with peer profitability levels; valued about 12x EV/EBIT on our FY ’24 estimates, clearly above peers while EBIT margin is to lag by many percentage points. The assumption may be fair, but leaves Finnair pretty much fully valued. We update our TP to EUR 0.40 (0.36); retain HOLD rating.

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Orderbook was yet again on a record level
Vaisala has increased its orders received for four consecutive quarters and the Q3 orderbook was on a record level. Q3 IM net sales grew by 22% y/y while the growth was stronger than expected in W&E which recorded y/y growth of 18%. In total, Q3 net sales amounted to EUR 133.3m (+20% y/y). Gross margin was hit by continued spot-component purchases which eventually amounted to 54.7%. With fixed costs elevated and gross margin weaker, relative profitability saw also a slight decline. Q3 EBIT amounted to EUR 22.0m, representing a 16.5% EBIT margin. The outlook for the near future remains bright despite the weakening economic indicators.

2023 uncertain, but megatrends support the demand
Guidance implies growth to continue in Q4. The record orderbook provides a foundation for H1’23 growth but the visibility to H2’23 is somewhat gloomy. Vaisala’s resilience to possible economic slowdown is hard to estimate but the company is exposed both for industrial investments and public spending. However, the company operates within fields in which growth is boosted by several megatrends. We consider these trends supporting the demand during uncertain times. In addition, the energy crisis in Europe will likely increase investments in renewable energy, power, and gas industries in which the company already operates.

Valuation remains elevated
We made no significant changes to our estimates. We see Vaisala developing favorably in Q4’22 and H1’23 but expect W&E to experience headwinds in H2’23. In total, we expect 23E group net sales to grow only by 2.5% but EBIT margin to further improve due to the margin impact of improved component availability. Vaisala’s 23E valuation remains somewhat elevated. We don’t see significant room for an upside in the share price, but we enjoy the ride with the high-class business of Vaisala. We retain our HOLD-rating and TP of EUR 40.0.

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• Enersense Q3 revenue grew 10.5% y/y to EUR 64.4m, compared to our EUR 65.4m estimate. Revenue grew in all other segments except Smart Industry, where the 18% y/y decline was mainly due to the lower volumes of the Olkiluoto 3 project. Power and Connectivity top lines were close to our estimates.
• Adjusted EBITDA landed at EUR 4.3m vs our EUR 2.0m estimate, while EBIT was EUR 1.9m vs our EUR -0.3m estimate. EBITDA improved in Power as well as Connectivity while it remained flat in Smart Industry. International Operations saw EBITDA decrease due to high inflation in the Baltics. Q3 EBITDA was burdened by investments in offshore wind power and a new ERP system to the tune of EUR 1.0m. Enersense has managed to negotiate price increases for new as well as existing contracts to compensate for inflation.
• Order backlog amounted to EUR 385m at the end of Q3, while it was EUR 272m a year ago. Smart Industry order backlog increased significantly, including the EUR 100m agreement with the energy company Helen (EUR 200m including the options to extend the agreement). Development was strong also in Power.
• Enersense guides FY ’22 revenue to be in the EUR 245-265m range and adjusted EBITDA EUR 6-12m (unchanged).

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Q3 results in line with our estimates

Consti Q3 results were in line with our estimates. Net sales in Q3 were EUR 79.0m (EUR 76.0m in Q3/21), in line with our and consensus estimates (EUR 79.8m/79.6m Evli/Cons.). Sales grew 4.0% y/y. Adj. operating profit in Q3 amounted to EUR 3.3m (EUR 3.1m in Q3/21), in line with our and consensus estimates (EUR 3.2m/3.3m Evli/cons.). The company was able to defend its margins in a difficult market environment as the operating margin stood at 4.2% (4.1% in Q3/21). The guidance for operating profit is intact at EUR 9-13m for FY 2022.

 

Strong backlog, market remains uncertain

Even though order intake and backlog decreased slightly y/y, both were still at a healthy level supporting the company’s near-term development especially during the rest of the year. According to the CFCI estimates, the Finnish renovation construction market is expected to grow 2% in 2023 while Euroconstruct expects volume growth of 1.3%. A survey study conducted by Talotekniikkaliitto in September, however, pointed towards a slower market development especially in the non-residential renovation building technology. The market environment also remains uncertain due to the higher construction costs and rising interest rates, although the labour-intensity of renovation alleviates some concerns.

 

BUY with a target price of EUR 11.0

Consti has been able to perform well in the turbulent market and the healthy backlog supports continued good near-term development. We find the story still attractive because of the supportive long-term drivers and undemanding valuation.

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New challenges from Solteq Digital
Solteq reported Q3 results below our already rather low expectations. Net sales declined 3.7% y/y to EUR 14.4m (Evli EUR 14.7m). The operating profit and adj. operating profit amounted to EUR -5.0m and -0.5m respectively (EUR 1.1m/1.2m in Q3/21), below our estimates (Evli EUR -4.1m/0.3m). Solteq Software’s EBIT was negative as expected while the modest growth was a positive. Solteq Digital unexpectedly showed a rather notable 9.6% y/y growth decline and profitability as a result was also on the weaker side. Problems appear to relate market demand and some delays and hesitation in customer activity.

Near-term outlook not the best
With the added woes of Solteq Digital, the near-term for Solteq looks rather challenging. Fortunately, Solteq Software showed some signs of the product development related challenges being alleviated and customer demand remains healthy. Nonetheless, with the problems being more fundamental in nature a clear recovery appears more likely to materialize during H1/2023. The market sentiment driven challenges in Solteq Digital are quite worrisome, with the segment having been the main driver of profitability. The challenges are likely to continue to some extent going forward as customers review investment needs, but a larger deterioration still appears unlikely supported by necessity-based investments. With the challenges, our expectations for 2023 remain on the softer side. Visibility is also subdued by the market environment and the pace at which Solteq Software, with the key Utilities business, is able to ramp-up growth again.

HOLD with a target price of EUR 1.2 (1.5)
With the added concerns and reduced visibility near-term upside remains somewhat limited although Solteq still exhibits significant and proven potential. On our estimates valuation upside relies on mid-term potential or significant improvements next year. We lower our TP to EUR 1.2 (1.5), HOLD-rating intact.

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• Group result: Orders received grew nicely by 25% and the orderbook was 14% higher than in the previous year. Net sales grew by 20% y/y to EUR 133.3m (133.3/133.3m Evli/cons.). The growth was driven by both Vaisala’s business units. Spot-component impact continued stronger than a year ago, and gross margin fell short that of the previous year. EBIT slightly improved and amounted to EUR 22.0m (22.0/22.0m Evli/cons.), EBIT margin of 16.5%. EPS amounted to EUR 0.44 (0.45/0.47 Evli/cons.).
• Industrial measurements (IM): Orders received grew by 30% (FX: 21%) y/y and the orderbook was 60% higher than a year ago. Net sales increased by 22% (FX: 14%) y/y to EUR 57.6m (Evli: 59.9m). A weaker gross margin had an impact on the EBIT margin which amounted to 25.3%. Profitability was under pressure of increased material and fixed costs.
• Weather and Environment (W&E): Orders received increased by 21% (FX: 14%) y/y and the orderbook was 6% higher than a year ago. Net sales grew by 18% (FX: 11%) y/y to EUR 75.7m slightly beating our estimates (Evli: 73.4m). Spot-component purchases weakened the gross margin, but surprisingly EBIT margin improved to 9.9% against our expectations.
• Market outlook: High-end industrial instruments, life science, power industry, and liquid measurements are expected to grow. Meteorology and ground transportation are expected to be stable. Aviation is expected to recover towards pre-pandemic level. Renewable energy market is expected to continue to grow. The global shortage of components is expected to continue during Q4’22 causing additional material costs.
• Guidance intact (revised on 14th Oct): Net sales of EUR 500-520m and EBIT of 62-72m.

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• Q3 revenue was EUR 719.2m, compared to the EUR 645.0m/666.6m Evli/consensus estimates. Good development in unit revenues supported top line, and total passenger revenue was some EUR 50m higher than we estimated. The performance was also helped by the fact that Q3 is seasonally the strongest quarter.
• Adjusted EBIT amounted to EUR 35.2m vs the EUR -7.3m/-4.1m Evli/consensus estimates.
• Fuel costs were EUR 242m vs our EUR 215m estimate, while staff costs amounted to EUR 117m vs our EUR 115m estimate. All other OPEX+D&A amounted to EUR 381m, compared to our EUR 353m estimate.
• Cost per Available Seat Kilometer was 8.18 eurocents vs our estimate of 7.81 eurocents.
• Finnair expects to operate an average capacity of around 70% (ASK) in Q4’22 in comparison to the figure in Q4’19. Leases of aircraft and crew would bring the total deployed capacity to about 80%. Strong travel demand should continue in the short-term and thus support unit revenues as in the summer months of 2022.

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Reasonable profitability given market conditions
SRV’s Q3 results were largely rather uneventful. Revenue in Q3 was EUR 186.8m (EUR 176.7m/194.0m Evli/Cons.), near previous year levels. The operating profit amounted to EUR 5.5m (EUR 3.1m/2.7m Evli/cons.). The difference was due to capital gains from the sale of a commercial centre and the operating profit margin in construction was slightly below our expectations (2.6%/2.9% act./Evli). Profitability was supported by improved controllability of projects, successful inflation control and ensuring the availability of materials. The order backlog at the end of the review period stood at EUR 717.1m, down some 30% y/y. SRV announced the initiation of change negotiations to meet the current market demand situation.

Heading into challenging market conditions
SRV is heading into a quite tough market, with construction material costs and inflation continuing to cause some hassle along with expectations of a decline in new building construction volumes. The pipeline for business construction appears to be somewhat fruitful but we see little support for the generally more profitable housing construction volumes. The visibility into 2023 is weak and currently we expect a sales decline of some 6%. There is still some potential for margin improvement potential, although we see the current headwinds limiting that in the short-term, and the completed financing arrangements will support bottom-line figures.

HOLD with a TP of EUR 4.3 (5.0)
Although valuation looks cheap, with the market challenges we see little potential for materialization of valuation upside compared with peers in the near-term. In the mid-term, improved margins and initiation of dividend payments could act as a catalyst, again however limited by current uncertainties. We retain our HOLD-rating with a TP of EUR 4.3 (5.0).

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Topline came in above expectations, but EBIT was modest
Due to the challenging market, Verkkokauppa.com’s Q3 result came in modest. Net sales declined by 2.3% y/y to EUR 137.8m. The decline was mostly driven by the consumer segment and core categories. Sales grew in the Export and B2B segments. B2B growth pace slowed down to 5% with reduced activity of SMB clients and Export growth was mostly supported by new customers gained. Evolving categories performed well in a challenging market and managed to grow by 3.1% y/y. Unfavorable sales mix and increased price competition showed in a weaker gross margin of 14.6%. The profitability was further harmed by increased cost pressures through investments in personnel and elevated logistics costs. Q3 adj. EBIT amounted to EUR 2.1m (1.5% margin).

2023 going to be challenging as well
The company guides for 2022: net sales of EUR 530-560m and adj. EBIT of EUR 5-9m. Lots of tasks must be done to reach the guidance since the weak market doesn’t provide much support. At this moment, large inventory burns cash, and the company has pressures to release capital from expanded inventories. A side effect of inventory clearance, namely margin investments possibly hurt profitability. We expect the inventory clearance to continue also in 2023. With low sales volumes and existing cost pressures, we expect the profitability to lag also in H1’23.

Negative view with elevated valuation
We decreased our estimates after the Q3 result. We see the upcoming year as challenging and our previous 2023 estimates seemed quite optimistic. With decreased topline estimates our 23 EBIT estimate saw a ~50% drop. We see it challenging for the company to stay profitable in H1’23, but EBIT to notably improve in H2’23. However, we find the current market as too uncertain. With our revised estimates, uncertain market environment and high valuation, we downgrade our rating to SELL (HOLD) and adjust TP to EUR 2.2 (3.5).

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Results apart from carried interest as expected
CapMan continued its good performance in Q3 and apart from carried interest (EUR 1.0m/5.0m act./Evli) coming in lower than we expected, the results were well in line with our expectations. Revenue amounted to EUR 15.9m (EUR 19.7m/19.2m Evli/Cons.) and operating profit to EUR 12.7m (EUR 16.5m/12.3m Evli/cons.). Capital under management increased to EUR 4.9bn. Investment returns continued to be at good levels despite valuation level decreases, aided by a few significant exits and strong operational performance in several portfolio companies. Carried interest was earned from Growth Equity and NRE funds.

Near-term softness seen in fundraising and transactions
In the near-term, some softness is anticipated in fundraising and transaction activity, although the overall sentiment still remains rather solid. Alternative asset AUM growth is forecasted to decline 3%p during 2021-2027e compared with 2015-2021, but the estimated growth of 11.9% p.a. is still at healthy levels. In terms of our estimates, we have made slight downward tweaks to our end of year expectations for carried interest and investment returns but otherwise no significant changes. We expect operating profit levels of EUR 50-60m during 2022-2023e with further potential in the mid- to long-term should fundraising activity remain at forecasted levels. Timing of carried interest realization and investment returns remain key short-term uncertainties.

BUY with a target price of EUR 3.1 (3.4)
CapMan’s investment case continues to remain favourable in our view and valuation still remains attractive. With some anticipated near-term softness and the potential impact on non-recurring income we lower our TP to EUR 3.1 (3.4), BUY-rating still intact.

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Consti's net sales in Q3 amounted to EUR 79.0m, in line with our and consensus estimates (EUR 79.8m/79.6m Evli/cons.), with growth of 4.0% y/y. EBIT amounted to EUR 3.3m, in line with our and consensus estimates (EUR 3.2m/3.3m Evli/cons.). Guidance reiterated: operating result in 2022 is expected to be EUR 9-13m.

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High growth but still low profitability margins in Q3

Suominen’s EUR 131.9m Q3 revenue grew by 34% y/y and topped the EUR 123.0m/121.5m Evli/cons. estimates. Growth was attributable to higher volumes, sales prices, and currencies in roughly equal portions. Early part of the quarter was still difficult especially due to low volumes in the US, but August and September were better as demand improved toward the end of Q3. There are still account-specific differences in the US with regards to the inventory build-up situation, but overall demand is clearly improving over the course of Q4. Meanwhile cost pressures remained larger than we estimated as profitability missed our estimates despite the high revenue. Gross profit was only EUR 5.2m vs our EUR 9.2m estimate, while the EUR 5.1m Q3 EBITDA (vs our EUR 7.0m estimate) benefited from tax credits.

US likely to continue to drive growth for some time

Americas already grew by 41% y/y to EUR 80m, while there should still be plenty of additional capacity to utilize in the US. It remains to be seen at how high a level Americas’ growth continues, but we would expect it to remain well above 20% for at least a couple of quarters. Meanwhile Europe’s growth should moderate over the course of next year as sales prices are no more to increase with raw materials prices (there’s also not that much additional capacity to utilize in Europe). We update our Q4 revenue estimate to EUR 145m (prev. EUR 129m).

US recovery and cost compensation to drive earnings up

Q3’s relative softness and the comments regarding the pattern of demand in the US over the quarter suggest Q4 will see steeper q/q improvement than we previously estimated. Earnings are set to increase from here, however considerable uncertainty persists around where the level will land next year. Further top line growth should be expected, due to demand volume trends, while energy costs will remain another profitability hurdle for at least a few quarters. We estimate 7.5% growth for next year, which in our view appears to be on the conservative side. Suominen remains valued a bit above 3x EV/EBITDA and 5.5x EV/EBIT on our FY ’23 estimates. We retain our EUR 3.0 TP and BUY rating.

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• Revenue in Q3 was EUR 186.8m (EUR 191.1m in Q3/21), above our estimates and below consensus estimates (EUR 176.7m/194.0m Evli/Cons.). Growth in Q3 amounted to -2% y/y.
• Operating profit in Q3 amounted to EUR 5.5m (EUR -1.6m in Q3/21), above our and consensus estimates (EUR 3.1m/2.7m Evli/cons.), at a margin of 2.9%. Profitability in Q3 was supported by improvement in the controllability of projects, successful inflation control and ensuring the availability of materials.
• Revenue in Construction in Q3 was EUR 183.9m vs. EUR 176.7m Evli. Operating profit in Q3 amounted to EUR 4.7m vs. EUR 5.1m Evli. 
• Revenue in Investments in Q3 was EUR 3.2m vs. EUR 1.1m Evli. Operating profit in Q3 amounted to EUR 1.9m vs. EUR -1.0m Evli. 
• Revenue in Other operations and elim. in Q3 was EUR -0.3m vs. EUR -1.1m Evli. Operating profit in Q3 amounted to EUR -1.2m vs. EUR -1.0m Evli. 
• SRV will start change negotiations to adjust the company’s cost structure and number of personnel to meet the demand of the current market situation.
• The weakened consumer confidence, increased interest rates and investors’ return requirements have deteriorated the outlook for the construction sector
• Guidance for 2022 (updated 25.10): Revenue in 2022 is expected to be EUR 770-820m (800-860m) and operative operating profit to amount to EUR 17-23m (15-25m).

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Especially high growth in Norway during Q3

Q3 revenue grew to EUR 59.7m, above our EUR 54.1m estimate. The 28.5% growth was driven by all three segments. High demand in Norway continued to support both Project Personnel and Consulting, and in our view the latter’s 33% growth was encouraging as it was driven by several larger projects within the Norwegian public sector as well as energy. Consulting continues to grow in Finland, but Suvic’s wind farm projects remain the more significant Dovre business. Dovre's EUR 3.0m EBIT topped our EUR 2.2m estimate (due to all three); Renewable Energy EBIT declined y/y (as the combination of busy construction season and inflation causes some challenges) but was nevertheless above our estimate. Dovre also made an upward revision to its guidance.

Renewable Energy and Consulting to drive FY ’23 EBIT

Dovre says this year has seen extraordinarily high growth (in our view the note concerns particularly Project Personnel) and such a level is not to be expected next year. This is no surprise, and we expect organic growth to slow to 7% in Q4. We have previously estimated an organic CAGR of 5% to be a reasonable long-term pace for Dovre, and we continue to expect such a rate for next year. We also see there to be further earnings growth potential especially within Renewable Energy; Suvic has managed well in terms of profitability despite the inflationary environment, and we see scope for margin improvement next year as wind farm demand remains high while the operating environment should be more normal. We continue to expect flattish profitability for Project Personnel going forward, while Consulting should be able to achieve earnings growth also next year.

Multiples are down, earnings growth potential attractive

We see a 5% growth rate realistic for next year and wouldn’t be surprised by a high single-digit rate, whereas such an organic double-digit rate as seen this year shouldn’t be expected. Dovre’s valuation is reasonable, around 8x EV/EBIT on our FY ’22 estimates, while we expect 50bps EBIT margin gain for next year. Peer multiples have retreated a bit, but we retain our EUR 0.75 TP and BUY rating as we make some upward estimate revisions.

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• Revenue in Q3 was EUR 15.9m (EUR 14.9m in Q3/21), below our estimates and consensus estimates (EUR 19.7m/19.2m Evli/Cons.). Growth in Q3 amounted to 7% y/y.
• Operating profit in Q3 amounted to EUR 12.7m (EUR 10.9m in Q3/21), below our estimates and in line with consensus estimates (EUR 16.5m/12.3m Evli/cons.), at a margin of 79.7%.
• EPS in Q3 amounted to EUR 0.06 (EUR 0.06 in Q3/21), below our estimates and above consensus estimates (EUR 0.08/0.06 Evli/cons.).
• Results were in line with our expectations apart from carried interest (Act./Evli EUR 1.0m/5.0m).
• Revenue in Management Company business in Q3 was EUR 12.6m vs. EUR 16.8m Evli. Operating profit in Q3 amounted to EUR 4.2m vs. EUR 8.2m Evli. 
• Revenue in Investment business in Q3 was EUR 0.0m vs. EUR 0.0m Evli. Operating profit in Q3 amounted to EUR 7.9m vs. EUR 7.8m Evli. 
• Revenue in Services business in Q3 was EUR 3.1m vs. EUR 2.9m Evli. Operating profit in Q3 amounted to EUR 1.8m vs. EUR 1.7m Evli. 
• Capital under management by the end of Q3 was EUR 4.9bn (Q3/21: EUR 4.3bn). Real estate funds: EUR 3.3bn, private equity & credit funds: EUR 1.0bn, infra funds: EUR 0.5bn, and other funds: EUR 0.1bn.

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Q3 figures and management comments largely as expected

Scanfil Q3 revenue grew to EUR 212m, compared to the EUR 210m/209m Evli/cons. estimates. Growth continued to stem across all customer segments. The 26% y/y growth (23% without the EUR 20m transitory spot component purchases) was a record pace and may not be reached again as it was driven by a very high level of customer demand as well as inflation. EBIT amounted to EUR 11.5m vs the EUR 12.3m/11.5m Evli/cons. estimates, and EBIT margin was a decent 6% when excluding the spot purchases. The amount of these transitory items already declined by a third q/q and thus suggests component availability challenges continue to ease, yet the situation will still take a while to wholly normalize.

Underlying growth should moderate a bit but remain strong

Scanfil’s business model allows incremental capacity additions, and hence supply-demand balance is unlikely to be altered too unfavorably even if EMS players, including Scanfil, expand their footprint in response to a particular phase of high demand. The Atlanta investments (EUR 4m in an SMT line as well as additional production space), in addition to production space increases in other locations, will mostly address needs current customers have, although Scanfil is also active in new customer acquisition. Customer demand forecasts remain strong across all key markets, at least for now, and Scanfil’s diverse customer base means demand risks are manageable even in the case of softening.

Further earnings growth with an undemanding valuation

The plant network is performing well, and no plant is lagging. The guidance midpoint suggests y/y growth will continue at a 14% pace in Q4; Scanfil should reach an above 6% EBIT margin even with some spot purchases. The estimated Q4 run-rate EBIT implies well above EUR 50m figure for FY ’23, which should be achievable even if top line growth turns negative due to the lost transitory invoicing items. Meanwhile Scanfil’s valuation is not too demanding, below 9x EV/EBIT on our FY ’22 estimates and around 7x next year. Our updated TP is EUR 7.0 (8.0); retain BUY.

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• Group results: net sales declined by 2.3% y/y to EUR 137.8m (135.9/136.5m Evli/cons.). Acquired e-ville.com contributed to Q3 net sales and EBIT by EUR 2.4m and 0.6m respectively. Gross margin was negatively impacted by weaker sales mix and price competition. Adj. EBIT was EUR 2.1m (3.1/2.6m Evli/cons.) as a result of the elevated cost level. EPS amounted to EUR 0.01 (0.05/0.04 Evli/cons.).
• Online sales: represented 58% of total net sales and decreased by 3.5% y/y while brick-and-mortar saw a 7.7% y/y decline.
• Category split: demand was good in some segments of core categories, such as household appliances and home entertainment devices, but in total the category declined by 5.2% y/y. The demand for evolving categories continued as good by growing by 3.1% y/y in a challenging market environment.
• Consumer segment: consumer segment continued lagging and declined by 7.8% y/y. The segment represented 70% of the group net sales.
• B2B segment: growth pace saw a slowdown to 5% y/y with SME clients reducing their activity. The segment represented 21% of the group net sales.
• Export segment: gained new customers from acquired e-ville.com and grew by 35.1% y/y, being 9% of total net sales. Net sales came back to its levels before the disposal of sales to Russia.
• Guidance was lowered ahead of Q3 result: net sales between EUR 530-560m and adj. EBIT between EUR 5-9m. Mid-point implies a revenue decline of 5.1% and an EBIT margin of 1.3%.

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• Net sales in Q3 were EUR 14.4m (EUR 14.9m in Q3/21), slightly below our estimates (Evli EUR 14.7m). Growth in Q3 amounted to -3.7% y/y. 
• The operating profit and adj. operating profit in Q3 amounted to EUR -5.0m and -0.5m respectively (EUR 1.1m/1.2m in Q3/21), below our estimates (Evli EUR -4.1m/0.3m). 
• Q3 challenges relates to earlier communicated challenges in Solteq Utilities’ software development and lower revenue and profitability in Solteq Digital. Write-downs relating to Solteq Robotics had a negative one-off impact of EUR 4.4m on EBIT.
• Solteq Digital: revenue in Q3 amounted to EUR 8.6m (Q3/21: EUR 9.6m) vs. Evli EUR 9.4m. Growth amounted to -9.6%. The adj. EBIT was EUR 0.2m (Q3/21: EUR 0.9m) vs. Evli EUR 0.8m. Demand in key business areas, such as digital business and commerce solutions, is expected to remain at a good level during the ongoing quarter.
• Solteq Software: Revenue in Q3 amounted to EUR 5.7m (Q3/21: EUR 5.4m) vs. Evli EUR 5.3m. The adj. EBIT was EUR -0.7m (Q3/21: EUR 0.3m) vs. Evli EUR -0.5m. Growth was 6.6%. The business outlook for Solteq Software is expected to remain positive.
• Guidance for 2022 (reiterated): group revenue is expected to remain at same levels as in 2021 and operating profit to be negative.

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Margins under powerful pressure despite solid growth
After soft Q2 DT delivered solid growth figures with SBU and MBU growing by double-digits while IBU’s low single-digit growth was restricted by a very strong comparison period. Group net sales increased by 17.5% y/y and amounted to EUR 27.3m (Evli: 27.1m). Q3 growth was supported by solid demand for medical CT devices, postponed Q2 deliveries, and strong aviation security sales. Despite strong growth, profitability was weak due to elevated material, logistics, and R&D costs. In addition, DT made EUR 1.3m provision due to the credit issues of its North American customer which eventually deteriorated DT’s profits further. Q3 EBIT accounted for EUR 0.6m (2.3% margin) which fell significantly short of our expectations (Evli: 3.8m).

Outlook implies growth to continue
The outlook for security seems bright. Aviation CT equipment upgrades have proceeded both in the US and Europe. Visibility to SBU’s demand continues far but medical OEMs have indicated market growth slowing down. In addition, visibility to industrial demand is somewhat foggy. In total, we expect DT to show double-digit growth both in 2022 and 2023. With spot-component purchases diminishing and additional R&D projects ending, we see DT’s profitability improving significantly. The company guides double-digit growth for Q4’22 and Q1’23 in all its business units.

Valuation neutral with our revised estimates
We made some minor downward adjustments to our 2023-24 estimates considering recent news. DT is currently trading approx. in line with its peers, and we see the valuation as not challenging. Security business provides visibility but uncertainty concerning medical growth and general downward economic development keeps us cautious. We retain our HOLD-rating and adjust TP to EUR 16.5 (prev. 17.0).

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• Group results: net sales grew by 17.5% y/y to 27.3 and was in line with our and market estimates (27.1/27.2m Evli/cons.). Component shortage restricted DT’s growth in all its business segments. Adj. EBIT was a disappointment, amounting to EUR 0.6m (3.8/3.6m Evli/cons.). Adj. EBIT margin was 2.3%. With low profitability also Q3 EPS of EUR 0.05 fell short of our and market estimates (0.20/0.20 Evli/cons.).
• Component shortage was present, and DT continued its sourcing of more expensive spot-components. Logistics costs were up, and the product modification project kept R&D costs elevated. In addition, a one-time provision worth EUR 1.3m had a significant impact on DT’s profitability. Component availability is expected to improve, and DT sees its profitability improving in Q4.
• Medical (MBU) grew by 24% y/y to EUR 14.8m, beating our expectations (Evli: 13.9m). The growth was driven by strong demand for CT-devices. In addition, postponed deliveries from Q2 supported medical growth in Q3.
• Security (SBU) increased by 14.6% y/y to EUR 8.5 and was below our expectations (Evli: 9.3m). Growth was driven by increased demand for aviation solutions. DT strengthened its position in the US aviation market which is good news considering future growth.
• Industrial (IBU): after a strong comparison period IBU showed y/y growth of 2.8%. Net sales amounted to EUR 3.9m and was in line with our expectations (Evli: 3.9m). Demand in the food segment continued at a good level, and demand increased in mining and NDT applications.
• Outlook: DT expects its group net sales and all business units to grow by double-digits in Q4’22 and Q1’23.

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• Suominen Q3 revenue was up by 34% y/y to EUR 131.9m, compared to the EUR 123.0m/121.5m Evli/consensus estimates. Higher volumes and prices helped, while there was a currency tailwind of some EUR 11.1m. Americas amounted to EUR 80.3m vs our EUR 73.0m estimate, while Europe was EUR 51.7m vs our EUR 50.0m estimate.
• Gross profit landed at EUR 5.2m vs our EUR 9.2m estimate. Gross margin was hence 3.9% vs our 7.5% estimate, which implies energy costs in particular were higher than we expected.
• Q3 EBITDA amounted to EUR 5.1m, compared to our EUR 7.0m estimate, while EBIT was EUR 0.2m vs our EUR 2.0m estimate. Higher volumes had a positive effect on profitability, but sales prices could not entirely keep up with raw material and energy costs.
• Suominen guides comparable FY ‘22 EBITDA to decrease clearly from previous year (unchanged). Suominen sees further US demand recovery as well as easing in high raw materials prices during Q4.

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Clear growth boost in Q3
Innofactor reported better than expected results. Growth clearly picked up a notch, 21.5% y/y (13.4% organic), with net sales of EUR 16.7m (Evli 14.9m). Growth was aided by improved invoicing rates following actions implemented after the weaker H1. Profitability came in line with our expectations, with EBITDA of EUR 1.8m (Evli EUR 1.9m). Relative profitability was in our view slightly soft but still at good levels. Subcontracting expenses increased y/y and the improvement in invoicing was gradual throughout the quarter, with September having been strong according to the company. The order backlog was up 7.3% y/y.

Potential for 2023 but too early to get overly excited
The achieved sales growth in Q3 along with the gradually improved invoicing rate provides very good support for the end of the year and confidence for Q4 appears to be strong. With the demand situation looking unchanged and should the achieved efficiency be sustained, Innofactor is set for notable earnings improvement potential heading into 2023. The sustainability of the higher operative performance remains a key concern given recent challenges, and further proof is warranted. We currently estimate a ~2%p increase in the EBITDA-margin in 2023 should the late-Q3 performance be sustained in the near future, although H1/22 was soft, and the potential is bigger than that.

BUY with a target price of EUR 1.25
Innofactor currently trades below peers. In our view this is not fully unjustified given the sub-par performance during 2022. We, however, still see that the shown improvement signs and potential still supports valuation upside. We retain our target price of EUR 1.25, valuing Innofactor near the peer median, and our BUY-rating intact. We note that peer multiples have come down recently and in absolute terms, the implied 2023 target P/E of ~10.5x is not overly challenging.

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• Dovre Q3 revenue grew by 28.5% y/y to EUR 59.7m vs our EUR 54.1m estimate. Project Personnel top line was EUR 22.5m, compared to our EUR 21.8m estimate. Consulting amounted to EUR 4.4m vs our EUR 3.4m estimate, while Renewable Energy was EUR 32.9m vs our EUR 28.9m estimate.
• Dovre EBITDA was EUR 3.2m, compared to our EUR 2.4m estimate, while EBIT was EUR 3.0m vs our EUR 2.2m estimate. Project Personnel EBIT amounted to EUR 1.1m vs our EUR 0.9m estimate. Consulting managed EUR 0.7m, compared to our EUR 0.4m estimate, whereas Renewable Energy EBIT was EUR 1.4m vs our EUR 1.2m estimate. Other functions & unallocated cost EUR 0.3m vs our EUR 0.3m estimate.
• Dovre’s new guidance is for revenue above EUR 195m and EBIT of more than EUR 7.3m. The previous guidance was for revenue above EUR 185m and EBIT in the range of EUR 6.5-7.5m. Dovre raised guidance yesterday thanks to strong demand in Project Personnel and Consulting as well as solid execution of Renewable Energy construction projects. Our latest estimates remain still in line with the new guidance, but our Q4 estimates now look a bit modest given the strong Q3 performance.

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• Q3 revenue grew by 26.3% y/y to EUR 211.9m, compared to the EUR 210.3m/208.6m Evli/consensus estimates. Transitory component invoicing amounted to some EUR 20m as the component availability challenges eased a bit. Customer demand remained strong in all customer segments.
• Advanced Consumer Applications amounted to EUR 67.8m vs our EUR 70.4m estimate, while Energy & Cleantech was EUR 53.1m vs our EUR 52.6m estimate. Automation & Safety amounted to EUR 44.2m, compared to our EUR 41.0m estimate.
• Adjusted EBIT landed at EUR 11.5m vs the EUR 12.3m/11.5m Evli/consensus estimates. Higher delivery volumes and lower FX losses had a positive effect. The pandemic did not have any significant effect and Scanfil expects further positive development for Q4.
• Scanfil guides revenue of EUR 800-880m and adjusted EBIT of EUR 43-48m for FY ’22 (unchanged). The guidance’s midpoints now suggest EUR 219m revenue and EUR 13.5m EBIT for Q4.

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• Net sales in Q3 amounted to EUR 16.7m (EUR 13.7m in Q3/21), clearly above our estimates (Evli EUR 14.9m). Net sales in Q3 grew 21.5% y/y and 13.4% organically. Net sales increased in all operating countries. Net sales growth was aided by improvements in invoicing rates.
• EBITDA in Q3 was EUR 1.8m (EUR 1.7m in Q3/21, in line with our estimates (Evli EUR 1.9m), at a margin of 10.7%. EBITDA was positive in all operating countries.
• Operating profit in Q3 amounted to EUR 1.0m (EUR 0.9m in Q3/21, in line with our estimates (Evli EUR 1.1m), at a margin of 5.8%. 
• Order backlog at EUR 77.3m, up 7.3% y/y. New orders included for instance the Legal Register Centre (approx. EUR 4.0m) Aalto University Foundation’s (approx. EUR 5.0m).
• Guidance for 2022 (reiterated): Innofactor’s net sales is expected to increase from 2021 (EUR 66.4m) and EBITDA is expected to increase from EUR 7.5m, which would have been EBITDA without the proceeds of EUR 2.6m from the sale of the Prime business. 

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We make no big estimate revisions before the report

Finnair’s Q3 RPK was as we expected, while the 80% load factor was about 5 percentage points higher than we estimated. North Atlantic RPK was already more than 40% above the Q3’19 comparison figure, which is one of the clearest demonstrations of the recent (necessary) updates to strategy. We estimate the continued recovery in passenger volumes, along with some increases to ticket prices, to have helped Finnair’s revenue to EUR 645m in Q3. Jet fuel prices seem to have stabilized lately but remain still very high in the historical context. We expect Finnair’s EBIT to have continued to improve, however we estimate it to have remained slightly negative in Q3.

Qatar Airways partnership one of the major recent updates

Finnair formally announced the keys of its updated strategy in September. Many of the points had been already discussed over the spring and summer months, including the pivot to North America and India, but Finnair has also signed a partnership with Qatar Airways which is to better connect Nordic capitals with the Middle East. The updated network as well as favorable terms on leased out planes and crew help Finnair’s continued recovery after the pandemic, but the Russian airspace closure still forces the company to make some downsizing choices. We estimate Finnair to reach positive EBIT next year, however our 2.3% EBIT margin estimate remains well shy of the 5% level the company aims to reach in H2’24. Finnair’s liquidity position is adequate, although the recent blows will leave their mark on the balance sheet. Then again, Finnair has no need to make major fleet refurbishments in the short to medium term. We look forward to comments regarding ASK and LFs in the coming quarters.

Valuation has moderated a bit, but still not cheap

Finnair continues to trade at high FY ’23 earnings multiples relative to peers as the pandemic already hurt the (legacy) Asian strategy more than those of other airlines. Finnair is valued around 12x EV/EBIT on our FY ’24 estimates, while other airlines are valued roughly that level on FY ’23 estimates. In our view this puts Finnair’s valuation in the fair to fully valued range. We retain our EUR 0.36 TP; our rating is now HOLD (SELL).

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Expecting uneventful Q3, some cost impact likely
Consti reports its Q3 results on October 27th. Progress during the first half of 2022 was at a rather good level despite some negative impact from rising material prices and inflationary pressure. Apart from some minor tweaks, our estimates remain intact. We expect continued modest growth supported by the order backlog and profitability levels similar to the comparison period given the slight strains from construction material increases. Consti’s 2022 operating profit guidance is at EUR 9-13m, with our estimate at EUR 10.2m.

Mixed signals on market outlook
The market outlook remains rather favourable for the on-going year aided by order backlogs, while the outlook going forward is showing mixed signs. The Confederation of Finnish Construction Industries RT (CFCI), in its October business cycle review, estimates the renovation volumes to grow by 1.5% and 2.0% in 2022e and 2023e respectively. On the other hand, a survey conducted by Talotekniikkaliitto during autumn 2022 regarding the Finnish renovation building technology market shows an increase of respondents expecting a slow-down of near 12%p to 31.4% compared with the survey conducted in spring 2022. The new residential building construction outlook is grimmer, with CFCI estimating a volume decline of 5.8% in 2023e. Data on construction cost development from Statistics Finland suggests a clear slow-down in cost growth during Q3, although still at a clearly elevated level on y/y basis.

BUY with a target price of EUR 11.0 (12.0)
Consti currently trades clearly below peers, which in our view remains hard to justify given the exposure to the more stable renovation market compared with the new construction focused peers. The continued high construction costs, economic uncertainty and inflationary environment, however, remain a threat, and we lower our target price to EUR 11.0 (12.0).

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Some encouraging profitability development

Raute’s Q3 revenue grew 10% y/y to EUR 42m, above our EUR 34m estimate. The beat was due to both projects and services, driven by Europe, and in our view the high EUR 19m service revenue also helped EBIT back to black (EUR 1.4m vs our EUR -0.3m estimate) as inflation has been more of a problem on the project front. Inflation eased a bit, but we believe Raute has also learned to better price in inflation within projects over the past year. The unwinding of the Russian book has had an adverse effect on working capital, hurting cash flow, but the issue is by nature temporary and Raute’s overall workload situation is not too bad despite the fact that Russia was an important market.

Top line may not grow next year without larger mill orders

Raute booked EUR 35m in new orders for the quarter, compared to our EUR 38m estimate. Services orders were soft compared to our estimate as modernization orders declined from the recent high figures, but we find it encouraging Raute has managed to gather solid order amounts for many quarters in a row without any larger mill orders. Smaller orders from North America are especially helpful at this point, while there’s a bit more uncertainty around Europe, the current largest market, going forward. There’s a need to add capacity in order to fill the gap left by the end to Russian imports. It’s unclear how this trend continues to play out in the short-term, but demand for large mill projects remains in place along the Eastern flank of Europe. Latin America is also showing signs of improvement, although it’s likely to remain a smallish market at least in the short-term.

We see more upside than downside from this point forward

Q4 is in our view still unlikely to be a great quarter in terms of profitability, but overall development appears favorable going towards next year, when the EUR 4-5m in cost efficiency measures should materialize, in addition to the benefits of the ERP project. Raute is valued around 6x EV/EBIT on our FY ’23 estimates, which we don’t view a challenging level considering our EUR 5.6m EBIT estimate is still far from long-term potential. We update our TP to EUR 11 (9); our new rating is BUY (HOLD).

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Volumes still in decline
During H1’22, the consumer electronics market fell by ~6% in terms of volumes (GfK, ETK, GoTech). However, during the same period, sales declined only by a percent, which can be explained by the price increases made. Based on monthly data, there are no signs of market recovery starting yet as electronics sales declined by 12% y/y in August (Stat.fi).

Weak demand burdens Q3 profitability
Verkkokauppa.com has suffered from weak consumer demand, which started with the soft consumer electronics market in Q4’21. We have adjusted our short-term estimates downwards driven by the lack of evidence of market recovery. While the B2B segment has shown strong growth during uncertain H1’22, we now expect the segment to experience some headwinds. In Q3, we expect net sales to decrease by 3.6% y/y to EUR 135.9m. Weakness is seen throughout product segments and sales channels. In total, we expect the full-year topline to amount to EUR 554.0m, reflecting a y/y decline of 3.6%. The company has continued its long-term investments according to its strategy despite the uncertain market environment. We estimate that these investments will be visible in increased fixed costs. With a narrow gross margin and lower net sales, Verkkokauppa.com’s profitability sees an extensive decline. Our Q3 EBIT estimate amounts to EUR 3.1m, while with 2022 adj. EBIT estimate of EUR 7.8m, we expect the company to fall short of its guidance slightly.

HOLD with a TP of EUR 3.5 (prev. 3.7)
Verkkokauppa.com currently trades with 23E P/E of 16x which is below its historical levels. However, we currently see no notable upside potential in valuation multiples given the company trading above the peer group’s median and a weakening economic outlook. We retain our HOLD-rating and lower TP to EUR 3.5 (prev. 3.7), mainly reflecting decreased expectations.

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• Q3 revenue grew by 10% y/y to EUR 41.8m, compared to our EUR 34.0m estimate. Project revenue was EUR 22.6m, compared to our EUR 19.0m estimate, while services revenue amounted to EUR 19.2m vs our EUR 15.0m estimate.
• EBIT amounted to EUR 1.4m vs our EUR -0.3m estimate. The remaining Russian project deliveries had a neutral profitability effect. The worst inflation pressures seem to have eased, but inflation remained a challenge in Q3. Component availability is still weak.
• Order intake was EUR 35m, compared to our EUR 38m estimate. Project orders were EUR 24m vs our EUR 20m estimate, while services orders amounted to EUR 11m, compared to our EUR 18m estimate. Modernization orders declined from the comparison period. Overall Western demand remained good, especially in North America.
• Order book amounted to EUR 94m at the end of Q3, of which EUR 6m was attributable to Russia.

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Growth is expected to continue in Q3 and H2
After the soft quarter of Q2, we expect DT to deliver double-digit topline growth both in Q3 and H2. With delayed Q2 net sales (due to supply chain issues), we expect MBU to grow by 16.4% y/y in Q3. Our SBU’s Q3 growth estimate of 24.7% is supported by a favorable market trend after a weak performance during the pandemic times. IBU had a strong comparison period (Q3’21: EUR 3.8m) and thus we expect the BU to grow only by 2.4% y/y. Our Q3 group net sales estimate amounts to EUR 27.1m, reflecting 16.8% y/y growth. In total, we expect DT to grow by 9.8% to EUR 98.6m in 2022.

Margins are under short-term pressure
Due to reduced topline estimates and cost inflation, we expect Q3 EBIT to land at EUR 3.8m (13.9% margin). Elevated material costs and higher investment in R&D cause some stress on Q3 and H2 margins. Our 2022 EBIT estimate of EUR 9.7m (9.9% margin) is quite moderate against DT’s margin potential and those seen in the past. We expect margins to significantly improve in 2023 when component availability improves and extraordinary R&D investments are over.

Outlook for security is favorable, medical growth to calm
Security market has performed well in 2022 and the demand outlook is bright. Major countries are investing in infrastructure security, aviation being one of the largest contributors. Both the company’s management and OEMs have indicated that the growth in the medical markets might be slowing down. However, we expect MBU to grow also in the future, at or above long-term the market.

Valuation neutral ahead of Q3, but risks are elevated
Our 23 EBIT estimate was decreased by some 17% due to elevated risk levels. With the recent decline in DT’s share price, 23E valuation seems quite neutral (23E EV/EBIT of 14x and P/E of 20x). We, however, don’t see much upside potential in multiples given weakening economic and industrial activity. We retain our HOLD-rating but lower TP to EUR 17.0 (20.0) ahead of Q3 result.

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H1 profitability was very weak, but H2 is set to be better

Suominen’s Q2 profitability proved a lot worse than we expected as margins continued to decline. Higher raw materials and energy prices hurt while there was still no remarkable recovery in US volumes. In our view US volumes are no more such a big problem in H2, whereas the cost side developments are twofold. Raw materials prices seem to have already reached their peak, while it’s far from clear how much higher energy costs may climb over the coming winter months.

Higher margins driven by volumes and cost compensation

We find Suominen’s raw materials prices (a composite including pulp, polyester, and polypropylene) declined by a couple of percentage points q/q in Q3. The development helps H2 margins as Suominen’s mechanism pricing continues to catch up with the price inflation seen earlier this year. Meanwhile energy costs, especially for the two Italian plants but also in other locations including the US, have continued to soar. Suominen has also implemented additional energy surcharges in Q3 which will help profitability over the coming winter months. Q3 profitability will nevertheless remain very much subdued; we make only minor estimate revisions ahead of the report, and now estimate Q3 revenue at EUR 123m (prev. EUR 121m) and EBITDA at EUR 7.0m (prev. EUR 7.4m). We expect Americas’ revenue to have grown by 28% y/y, helped by strong USD as well as a recovery in volumes (partly thanks to production line conversions to better address current demand) and higher sales prices. We estimate line upgrades in Italy to have helped Europe to a 20% y/y growth.

US volume recovery is a key value driver from now on

Mechanism pricing and energy surcharges mean Suominen’s margins adjust to inflation incrementally and hence will rebound from the lows. US volume recovery is thus the crucial operational profitability driver from now on. In our view nonwovens wipes’ consumable nature helps their demand to stick high after the initial pandemic boost. Suominen’s valuation remains undemanding, some 3x EV/EBITDA and 5.5x EV/EBIT on our FY ’23 estimates. Our new TP is EUR 3.0 (3.5); we retain our BUY rating.

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Cost inflation will continue to burden Q3 results

Raute’s Q2 bottom line was burdened by some EUR 11m in one-off items mostly related to Russian orders, in addition to which cost inflation was a bigger challenge than we had expected. Q3 figures should be clear of exceptional provisions, but we expect inflation will still be a major limiting force on profitability even if Raute has learned to better anticipate cost issues since late last year. We estimate EUR 34m top line and EUR -0.3m in EBIT for Q3, which implies q/q improvement but clearly below the y/y comparison period. Q2 report saw a high level of EUR 40m in order intake as a bright spot; there have now been a few quarters with such healthy order levels in a row without any larger projects, and we expect EUR 38m in Q3 order intake.

Orders have developed favorably even without larger ones

Small order demand should have remained at a good level especially in North America, while Europe is now Raute’s most important market. European demand doesn’t currently appear quite as strong as in America, except for the Baltics and Eastern Europe, but Raute’s order book should remain above EUR 100m going into next year. We thus estimate FY ’23 revenue roughly flat at around EUR 140m. In our view such a workload should be more than enough to help the company reach positive EBIT next year, especially given the fact that Raute has recently implemented cost savings measures. Raute could reach positive EBIT already in Q4’22 assuming services demand remains high.

Downside is limited, but upside still waits a few triggers

We estimate some EUR 4m in FY ’23 EBIT, which we believe Raute should be able to achieve even if top line remains modestly below EUR 140m. Such figures would still fall clearly short of longer-term potential, and the 7.5x EV/EBIT valuation on our FY ’23 estimates doesn’t seem very challenging. Any changes to Raute’s competitive positioning appear unlikely, and hence downside should be limited given the current low expectations. The upside potential, however, is likely to be triggered only once Raute has demonstrated results after the recent burst of inflation as well as continued solid demand in Western markets. Our new TP is EUR 9 (11); we retain our HOLD rating.

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The guidance upgrade, due to ESL, wasn’t a major surprise

Aspo’s upgraded guidance has a midpoint of EUR 54.5m as ESL will continue to drive high profitability also in H2. We view ESL’s current operating environment relatively normal in the sense that the war has had only a very limited impact (we note ESL’s performance is not sensitive to raw materials price changes), however it should also be noted the dry cargo market has gained strength since H2’20 and ESL may now have reached a point where it’s not easy to improve without additional capacity; short term outlook remains strong, while some softening may be due in the medium term. The hybrid vessel investments will support long term profitability potential. The Baltic Dry Index is down by double digits from its recent highs, but this may have only muted implications for ESL due to its differentiated positioning compared to large global dry bulk cargo carriers.

We make only small upward estimate revisions

Aspo disclosed progress regarding Telko’s Russian exit, for which the company is set to receive some EUR 9.5m from a local industrial buyer after the authorities have approved the deal. An exit from Belarus is also in the works. Leipurin is similarly in the process of looking for an exit, but in our view the integration with Kobian is a more significant short to medium term development. We previously estimated EUR 52.7m for FY ’22 adj. EBIT and our revised estimate stands at EUR 55.1m. Our updated estimate for next year is EUR 44.4m (previously EUR 43.4m). Leipurin’s EBIT will likely continue to improve thanks to the Kobian deal, whereas we estimate ESL’s EBIT to decline by some EUR 3m next year. In our view Telko’s H2’22 and FY ‘23 performance remains the biggest question mark as possible price declines could hit margins along with lower volumes.

Valuation not challenging on our ca. EUR 45m FY ’23 EBIT

We expect FY ’23 EBIT to remain well below EUR 50m, mostly due to Telko’s softening, but the below 8x EV/EBIT valuation levels are not that challenging especially when Telko and Leipurin continue to tilt West and ESL still has long term potential left thanks to its upcoming investments. We retain our EUR 9.5 TP and BUY rating.

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One growth leap came to an end
Etteplan’s ambitions to acquire Semcon through a public offer were halted earlier in October after a competing offer came in from Ratos AB. Etteplan had announced that the offer price would not be increased, and the offer ended as Etteplan’s offer was not accepted to an extent that would have enabled ownership of more than 90% of outstanding shares. One-time costs related to the preparation of the transaction are booked in the third quarter of the current year. The financial guidance for 2022 remains unchanged, with revenue estimated to be EUR 340-370m and EBIT EUR 28-32m. Currency hedging risks relating to the transaction will have a significant negative impact on Q3 EPS and the final effect is recorded in Q4.

2022 earnings impacted by one-offs relating to the offer
The unsuccessful offer is unfortunate given our assessment of the mid- and long-term potential of the combined companies and the associated costs will weigh on 2022 financials. We have revised our 2022 EBIT estimate to EUR 28.2m (prev. EUR 29.2m) based on the perceived transaction costs and EPS to EUR 0.74 (prev. EUR 0.90), with our adj. EPS estimate still at EUR 0.90. The one-offs have increased profit warning risks for H2 should market conditions deteriorate but on the other hand, with the guidance still intact, slight added confidence is provided for the level of operative performance.

BUY with a target price of EUR 15.0 (18.0)
With the offer for Semcon not being successful we adjust our target price to EUR 15.0 (EUR 18.0) based on the perceived missed out value creation potential. Continued market uncertainty has further had a slight impact on peer multiples. Our TP values Etteplan at ~16.5x 22e adj. P/E, above the peer median given Etteplan’s historical and anticipated performance but below recent year historical averages due to the market outlook. We retain our BUY-rating.

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Outlook even brighter than expected
Vaisala upgraded its guidance and reported preliminary figures for Q3’22. Guidance raise was expected with strong demand seen throughout the year as well as the record-high order book. In its new guidance, Vaisala expects 2022 revenue to land between EUR 500-520m (prev. 465-495m) and EBIT to amount to EUR 62-72m (55-70m). Mid-point of the guidance implies y/y growth of 16% and an EBIT margin of 13%. Q3 received orders worth EUR 137.2m implies the demand continuing strong also in Q4 and possibly in Q1’23.

Strong H2 upcoming
According to the preliminary figures, Vaisala had a successful Q3 in terms of both sales and profitability considering the current market environment. Q3 net sales grew by ~20% y/y to EUR 133.3m (Evli estimate: 119.2m) and EBIT amounted to EUR 22.0m (Evli estimate: 19.6m). Q3 EBIT margin of 16.5% was approx. in line with our expectations. In our estimates, both BUs delivered strong growth in Q3, but the magnitude was more prominent in industrial measurements.

Estimating the growth to slow down in 2023
With upgraded guidance, we slightly adjusted our short-term estimates upwards. Our 2022 net sales estimate amounts to EUR 512.6m (17.1% y/y growth) and the EBIT estimate lands at EUR 65.1m (12.7% margin). We expect elevated cost pressures to restrict profitability somewhat. Only minor adjustments were made to 2023 estimates: we expect Vaisala to see more restrained growth with weaker macroeconomic conditions decreasing the investment activity. We expect Vaisala to show solid growth in H1’23 but slope to reverse in H2’23 due to a strong comparison period and economic uncertainty. In our view, valuation still stretches somewhat providing no large upside potential. We retain our HOLD-rating and target price of EUR 40.0 ahead of the Q3 result.

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• Following the reverse share split, the number of shares will decrease from 267,198,378 to 6,679,959
• From today, 30 September 2022, the share price will reflect the effect of the reverse share split
• In addition to the reverse share split, the EGM resolved to approve the planned cross-border downstream merger
• As a result of the merger, Endomines Finland will be the new parent company of the group
• Shareholders of the company will receive one new share in Endomines Finland for each share owned in the company
• Final conditions of the merger are expected to be fulfilled on or about 16 December 2022 
• We have updated our models regarding the number of shares, there are no changes to our estimates. We update our TP to SEK 64.0 (1.6) due to the reverse split. HOLD-rating intact.
• The gold price has stayed roughly at the levels seen during our last update
• No updates to other assumptions regarding the company’s financials 
• Therefore, the target price change is purely driven by the change in number of shares

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Issues in the United States have continued to weaken the performance
During the recent years, the company has faced issues in the Friday mine and processing plant ramp-up. According to the new strategy, the company’s assets in the United States are developed through partnerships, additionally, divestments are considered as a potential option. In our view, the company’s ability to realize value in the United States is essential for the investment case.

Focus on the Karelian gold line
Production in Pampalo mine was commenced in Q1 2022 supported by the current favorable gold prices. Endomines was able to produce 2 227 ounces of gold in the second quarter of 2022 and posted a positive EBITDA for the Pampalo operations. In the coming years, Endomines is planning to commence production from the satellite deposits and conduct a wide scale exploration campaign in the Karelian gold line. There is also likely to be life of mine increases in Pampalo underground mine as the company is currently extending the decline deeper. We see potential upside for the valuation via successful exploration and mining efforts.

HOLD with a target price of SEK 1.6 (1.7)
We decrease our target price to SEK 1.6 (1.7). The positive assumptions changes regarding the Pampalo underground potential and the Karelian Gold Line satellite deposits are outweighed by adjustments to gold price estimates driven by souring gold market sentiment.

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Second profit warning for 2022
Solteq issued its second profit warning this year. With the new guidance Solteq expects group revenue to stay at the same level as in the previous year (prev. grow) and operating profit to be negative (prev. weaken). A key item in the downgrade is the write-off of product development investments made into the Solteq Robotics business, resulting in a one-off impact of approx. EUR 4.4m in the third quarter off 2022. Product development costs of Solteq Utilities have also continued to affect the business and project and service delivery costs of Solteq Utilities have increased. The revenue and profitability of the Solteq Digital segment have also weakened.

Some challenges across the board
Solteq had issued a profit warning in May, largely relating to challenges in the Utilities business. The challenges relate to productization of the solutions and performance was hampered by resourcing challenges relating to deliveries and customer project fixes. The previous guidance put quite some catch-up pressure on operational performance in H2/2022 after the weak Q2 results. Those risks appear to have materialized and with Solteq Digital also seeing some continued weakness, the overall market uncertainties may be starting to show. The Solteq Robotics business has seen commercialization challenges due to the pandemic and we have not emphasized any potential in our estimates. The write-off is still notably negative given previous fairly upbeat comments.

HOLD (BUY) with a target price of EUR 1.5 (2.7).
On our revised estimates, excl. the one-offs, valuation on current expected current year performance is quite stretched. Uncertainty is clearly elevated and overshadows coming years earnings improvement potential. We downgrade our rating to HOLD (BUY) with a target price of EUR 1.5 (2.7).

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Long-term targets were raised
In its capital markets day, Marimekko introduced its revised strategy for the period of 2023-27 and opened drivers for its updated long-term financial targets. The company aims for an annual net sales growth of 15% (prev. 10%) and a comparable operating profit of 20% (prev. 15%). Net debt to EBITDA ratio of max. 2x and yearly dividends of 50% of net earnings were left intact. We see the growth target as somewhat ambitious, especially during uncertain times that the western economies are currently facing. Meanwhile, we believe that the margin target is within a reach with the topline growth continuing and investments in efficiency.

Five success factors for scalable growth
The success of Marimekko’s strategy is based on five different pillars of which several relies on megatrends. The company emphasizes sustainability, a creative vision to obtain a wider audience, accelerating growth in Asia, love for the Marimekko brand and people, and end-to-end digitality to boost omnichannel growth and efficiency in order to achieve its ambitious targets. We see that Marimekko is well positioned in sustainability which is an ever-increasing trend in lifestyle products. Moreover, Marimekko’s strong brand supports the demand for Marimekko products even during uncertain times.

BUY with a TP of EUR 12.0
With the recent decline in Marimekko’s stock price, we see the company’s current valuation as quite attractive and upgrade our rating to BUY (prev. HOLD). However, with the uncertainty concerning the market environment and our estimates, we lower our TP to EUR 12.0 (prev. 13.2).

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Global player in value-adding high-end measurements
Vaisala operates in niche segments of weather, environmental and industrial measurements. The company focuses high value-adding processes and delivers mostly customized solutions. The company emphasizes its R&D activities with annual investments of 13% of net sales on average. We see Vaisala having solid competitive advantages, such as science-based technology leadership, elevated knowledge in high-mix/low-volume operations, a broad product portfolio, and fast and reliable delivery. Moreover, bolt-on acquisitions have boosted the company’s market share and provided new growth opportunities in new market areas.

Continuity with the revised strategy
Vaisala updated its well-succeeded strategy in 2021 to better reflect the core of its business, vision, and megatrends applying to its industry. The company highlights its product and technology leadership, deep customer understanding and application know-how, scalability, and engaged and talented personnel in its current strategy. In our view, the execution of the company’s strategy has started well. Vaisala has grown quite profitably in 2021 and 22, and in early 2022, the company acquired US-based SaaS company AerisWeather to increase its technological capabilities and scalable digital business.

Uncertain market environment forms some gray clouds
We see the current market environment as quite uncertain and with slowing GDP growth and industrial activity, we revised our 2023-24 estimates slightly downwards. The company’s valuation is quite stretched, and valuation multiples have no room for any upside in our view. With our revised estimates and Vaisala’s elevated valuation, we lower our TP to EUR 40.0 (prev. 43.0) and retain HOLD-rating.

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Seeking to double AUM over the next five years
CapMan held its Capital Markets Day 2022 event on September 7th. CapMan has somewhat ambitiously set its sights on doubling AUM over the next five years and raised the combined growth objective for the Management Company and Service businesses (excl. carried interest) to more than 15% p.a. on average (prev. >10%). The company is now also more proactively seeking M&A opportunities, which to our understanding would lean towards the investment product scope. CapMan is also clearly making sustainability an even more integral part of its operations and seeking to act as a frontrunner in the industry. CapMan kept its ROE target of over 20% p.a. on average and its objective to pay annually increasing dividends intact, adjusting its equity ratio target to over 50% (prev. >60%).

Mid-term estimates slightly raised in light of growth target
We have made revisions to our mid-term estimates based on the new targets, having raised our AUM growth estimates and Management company business turnover and operating profit estimates accordingly. Reaching the AUM target will in our view require M&A activity at some point in time and continued good traction for private asset allocations. Growth will still rely on further scaling of CapMan’s private equity strategies, having successfully built the foundations during the previous strategy period, and new investment products indeed seem to be in the pipeline across the board. The CMD overall acted as a further confidence boost to the investment case and CapMan demonstrated that CapMan is a force to be reckoned with.

BUY with a target price of EUR 3.4
The CMD further reaffirmed our positive views on CapMan’s investment case and demand appears to remain fairly solid overall. Although we have slightly raised our estimates, with the overall market uncertainty we retain our target price of EUR 3.4 and BUY-rating.

Open report

• Marimekko’s new long-term financial targets are:
  • Annual growth of 15% in net sales (prev. over 10%)
  • Comparable EBIT margin of 20% (prev. 15%)
  • Net debt/EBITDA ratio max. 2x (unchanged)
  • Intentions to pay a yearly dividend, at least 50% of net income (unchanged).
• In our view, net sales target is somewhat ambitious but well within reach with int’l growth succeeding. However, current macroeconomic trends, especially in western economies, might cause some challenges in achieving annual growth of 15% in the short-term.
• A comparable EBIT margin target of 20% was expected as the company has outpaced its profitability target during the past two years. In 2021, the company recorded an EBIT margin of 20.5% while our margin estimate for 2022 is 19.4%.
• Marimekko intends to focus on scaling its business and growth, especially in international markets during the next strategy period of 2023–27. The success relies on factors such as focus on sustainability, vision to speak to a wider audience, accelerated growth in Asia, love for the Marimekko brand, and increased digitalization to boost omnichannel growth and efficiency.
• The company will elaborate on the strategic direction and the new long-term financial goals in its Capital Markets Day on 14 September. We maintain our estimates and recommendation intact and publish an update on Marimekko after the CMD.

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H1 results better than anticipated
Administer reported better H1 results than we had anticipated. Net sales in H1 amounted to EUR 23.9m (EUR 21.9m in H1/21) (Evli EUR 21.9m) and grew 20.5% y/y driven by acquisitions. Net sales were burdened by the impacts of general economic uncertainty on customer activity as well as by the customer losses in Adner in 2021. EBITDA amounted to EUR 1.0m (Evli EUR 0.5m), at a margin of 4.2%. Profitability was burdened by higher than anticipated overlapping costs for the old and new system stemming from Administer’s subsidiary Adner’s system reform.

Somewhat dimmed expectations for coming years
Administer remained on track on its inorganic growth strategy, with five acquisitions announced/completed YTD (2022 target 5-10). Investments are being made into technology and strengthening the organization as part of the strategy. Administer lowered its guidance on August 12th, expecting net sales of EUR 47-49m and an EBITDA-margin of 5-7%. Our estimates remain at the midpoint of the guidance ranges. We have somewhat lowered our 2023 expectations, still expecting rapid, largely inorganic growth. We expect profitability to improve because of a lower impact of Adner’s system reform and small overall improvements. With the current uncertainties we expect a more normalized run-rate level of profitability in 2023, while further profitability improvements through Administer’s strategy and acquisition synergies appears more distant.

BUY-rating with a target price of EUR 3.6 (4.0)
Administer currently trades clearly below peers. We have and continue to see a clear discount as warranted given recent year challenges and rather low profitability. Current valuation levels (0.6x 2022e EV/sales), however, suggest little to no improvement potential. With somewhat lowered expectations for coming years, we adjust our TP to EUR 3.6 (4.0), BUY-rating intact.

Open report

• Net sales in H1 amounted to EUR 23.9m (EUR 21.9m in H1/21), above our estimates (Evli EUR 21.9m). Net sales in H1 grew 20.5% y/y. Growth was mainly attributable to the acquisition of EmCe and acquisitions made during H1.
• EBITDA and EBITA in H1 were EUR 1.0m (H1/21: EUR 0.6m) and EUR 0.6m (H1/21: EUR 0.2m) respectively, above our estimates (Evli EUR 0.5m/0.1m). The EBITA-margin amounted to 2.3%. Profitability was burdened by higher than anticipated overlapping costs for the old and new system stemming from Administer’s subsidiary Adner’s system reform
• Operating profit in H1 amounted to EUR -0.5m (EUR -0.3m in H1/21), above our estimates (Evli EUR -0.9m).
• During H1 Administer completed the acquisition of the payroll services of Konjunktuuri Oy, international financial and payroll management specialist WaBuCo Financial Services, and accounting services providers Sydän-Suomen Taloushallinta and Tilitoimisto Ollikainen.
• Guidance for 2022 (updated 12.8.2022): Administer expects that its net sales will amount to EUR 47-49m and the EBITDA-margin to be 5-7%. The company further expects to make 5-10 acquisitions over the course of 2022. 

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Weak H1 earnings but operatively decent figures
Fellow Bank reported H1 results which operatively were slightly better than we estimated but the change in expected credit losses due to the loan book growth clearly exceeded our expectations and as such the profitability was below expectations (PTP act./Evli EUR -7.4m/-2.3m). Realized credit losses were on a moderate level (EUR 0.7m). Total income of EUR 2.4m (Evli EUR 2.8m) was skewed by the old P2P loans while NII of EUR 2.5m exceeded our expectations (Evli EUR 2.0m). Total OPEX excl. non-recurring items was quite in line with our expectations. After starting the banking operations, Fellow Bank’s business lending and consumer lending volumes increased by 49% and 35% respectively compared with the beginning of the year, supported by competitiveness of the new operating model.

Additional capital needed to support loan book growth
Fellow Bank estimates that the loss in H2 will be clearly smaller than in H1. Potential for positive monthly profit levels during H1/23 is seen, assuming a loan portfolio of around EUR 180m and the bank’s estimated cost level and lending interest margin. The total capital ratio was at 19.4% and the need for additional capital to continue growth kicked in sooner than we anticipated due to the H1 losses. Fellow Bank announced actions aiming at the issue of a Tier 2 debenture in the early autumn.

HOLD with a target price of EUR 0.42
Apart from the clear difference to our estimates in the non-cash ECL changes and the faster than anticipated need for additional capital, performance was quite as expected, and growth figures look promising. Profitability scaling due to growth ambitions appears slightly slower than we previously anticipated but intact. We retain our HOLD-rating and TP of EUR 0.42.

Open report

• Total income during H1/22 amounted to EUR 2.3m (Evli EUR 2.8m). Net interest income amounted to EUR 2.5m (Evli EUR 2.0m) and net fee and commission income to EUR 0.0m (Evli EUR 0.8m). 
• After starting the banking operations, business lending and consumer lending volumes increased by 49% and 35% respectively compared with the beginning of the year
• The loan portfolio at the end H1 amounted to EUR 114.5m and the deposit portfolio was EUR 223.4m.
• The pre-tax profit during H1 amounted to EUR -7.4m (Evli EUR -2.3m). The difference compared with our estimates was mainly due to a larger than estimated ECL change due to growth in the loan book, total OPEX also slightly above our estimates at EUR 5.6m (Evli EUR 5.1m). Profitability was burdened by non-recurring costs relating to the launch of banking growth investments
• Earnings per share amounted to EUR -0.1 compared with our estimate of EUR -0.02.
• CET1 and the CET1 ratio amounted to EUR 19.6m and 19.4%. After the reporting period, Fellow Bank started actions aiming at the issue of a Tier 2 debenture in the early autumn.
• The cost / income ratio amounted to 235%.

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Cash offer for Swedish technology company Semcon
Etteplan announced a recommended cash offer of SEK 149 per Semcon’s share, for a total value of approx. SEK 2,699m. The Board of Directors of Semcon has unanimously recommended that the shareholders of Semcon accept the offer. The offer is conditional among other things upon the offer being accepted to more than 90 percent and approval from the Swedish Competition Authority. Semcon is an international technology company with more than 2,000 employees and 2021 revenue of SEK 1,711.3m and operating profit of SEK 175.1m. The combined entity would on consensus estimates have a combined 2022e revenue of over EUR 500m and have a strong market position in particular in the Nordics. Synergy effects are estimated to amount to EUR 5m on an annual basis.

Financing secured, planning EUR 110-125m rights issue
The completion of the offer is not subject to any financing condition and Etteplan is furthermore planning a rights issue of EUR 110-125m. Both the offer and rights issue appear to have good support from existing shareholders of Both Semcon and Etteplan. We see that the transaction would benefit both Etteplan as a company as well as shareholders.

BUY (HOLD) with a target price of EUR 18 (16)
Considering consensus estimates for Etteplan and Semcon along with valuation considerations and the impact of the transaction on net debt and nr. of shares, we see a potential of some 10-20% in the coming years depending on realization of synergy effects. Despite uncertainty, the offer appears favourable for shareholders and with the size and geographic presences of both companies and geographic presences the likelihood of regulatory obstacles appears limited. We adjust our TP to EUR 18 (16), rating upgraded to BUY (HOLD). Our estimates remain intact for now.

Open report

• Etteplan announced a recommended cash offer of SEK 149 in cash per Semcon’s share. The total value of the offer is approximately SEK 2,699m. The offer price will not be increased.
• The offer price represents a premium of of 31.6 percent compared to the closing price of Semcon shares on Nasdaq Stockholm on 22 August 2022 and 32.0/27.6 percent compared to the volume-weighted average trading price during the last 30/180 trading days prior to the announcement of the offer.
• The Board of Directors of Semcon unanimously recommends that the shareholders of Semcon accept the offer.
• The Offer is conditional among other things upon the offer being accepted to such extent that Etteplan becomes the owner of shares in Semcon representing more than 90 percent of the total number of shares in Semcon (on a fully diluted basis).
• Semcon is an international technology company with more than 2,000 employees in seven different countries. Semcon’s revenue in 2021 amounted to SEK 1,711.3m and operating profit to SEK 175.1m. 
• On 2022 estimates (one analyst) the offer would value Semcon at ~16x P/E and EV/EBIT of ~12x, roughly in line with Etteplan’s current valuation.

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Another strong quarter for Project Personnel

Dovre grew 38% y/y to EUR 47.3m top line vs our EUR 50.5m estimate. Project Personnel and Consulting landed close to our estimates, while Renewable Energy fell EUR 3m short. We reckon late Finnish spring to have caused Suvic project delays, but the segment didn’t disappoint in terms of EBIT as it posted a big y/y improvement despite Q2 being relatively slow and this year also challenged by an inflation spike. Consulting EBIT was as expected as progress continued in both Norway and Finland. Consulting is still mostly driven by early-stage reviews of Norwegian civil & infrastructure projects, however the acquisition of eSite has added a new angle to serve Finnish industrial clients with VR solutions. Extended high demand in Norway also helped Project Personnel to top our EBIT estimate, and as a result Dovre’s EUR 1.7m EBIT came in easily above our EUR 1.2m estimate.

Renewable Energy could still drive another positive revision

Dovre revised its guidance only two weeks ago, so it came as no surprise there was no further upgrade despite the continued high Q2 profitability and demand outlook for H2. Oil prices stay high, which supports oil & gas capex levels and hence Project Personnel, but risks seem to tilt more towards downside from here on. We estimate 4.5% FY ‘22 EBIT margin for Project Personnel, which is more than a satisfactory level yet still short of long-term potential. We continue to expect only flat PP EBIT development for next year. Covid-19 may still cause some sick leaves, while extraordinary inflation rates tend to be more of an issue for Renewable Energy than the other two segments. Q3 is seasonally the best one for Suvic but it may not achieve y/y EBIT improvement this year due to a very strong comparison period.

EUR 7.5m EBIT leaves ample room for earnings growth

We see Dovre headed towards the upper end of its EBIT guidance range. Suvic’s H2 performance could yet lead Dovre to top the range, while Consulting should be able to resume earnings growth next year. Renewable Energy’s expansion is also set to continue. We see potential for EBIT to improve to EUR 9m next year and thus we revise our TP to EUR 0.75 (0.70); retain BUY.

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Operative H1 figures quite in line with expectations
Endomines reported H1 operative figures well in line with our estimates. Pampalo gold production amounted to 3,478 oz vs our estimate of 3,622 oz. Revenue amounted to SEK 59.1m (Evli SEK 60.4m) while EBITDA amounted to SEK -38.0m (Evli SEK -36.6m). EBIT of SEK -107.1m came below our estimate (SEK -73.6m) due to amortizations of Friday assets. EBITDA of Pampalo operations turned positive in Q2, at SEK 7.7m. Endomines expects production in H2/2022 to increase by 30-70% compared with H1, putting the full year estimate at roughly 8,000-9,400 oz (Evli updated estimate 8,847 oz). No production is expected from Friday in H2.

Strategy focusing on Finland and partnerships in the US
Endomines updated its strategy, with focus on Pampalo and development and exploration along the Karelian Gold Line. Focus in the US will be on partnership models, meaning that Endomines will not operate any assets by itself. We expect production to rely on Pampalo in the near-term, with potential to bring Hosko and/or Rämepuro to production in H2/2023, not yet included in our estimates. A significant amount of resources will be used for exploration along the Karelian Gold Line and the further funding in the near-term remains on the agenda. The new strategy brings further uncertainty to the future of the US assets but given the company’s resources and funding needs the logic is sound.

HOLD with a target price of SEK 1.7 (2.2)
With the new focus and corresponding changes to our SOTP- model, having lowered the implied value of Friday and revisions to gold price estimates due to recent volatility and changing interest environment, we adjust our TP to SEK 1.7 (2.2). Our HOLD-rating remains intact.

Open report

• Revenue     in H1 amounted to SEK 59.1m, in line with our estimate of SEK 60.4m. Gold production amounted to 3,478 oz vs our estimate of 3,622 oz.
• EBITDA in H1 was at SEK -38.0, in line with our estimate of SEK -36.6m.
• EBIT in H1 amounted to SEK -107.1m (Evli SEK -73.6m), including an impairment charge of SEK 54.9m for the Friday tangible assets. 
• During H1, at Pampalo, gold production increased by 78% in Q2 to 2,227 oz compared with Q1. H2 production at Pampalo is estimated to be 30-70% higher than production during H1/2022, i.e. ~4,500-5,900 oz (Evli 5,671 oz).
• Production at Friday remains halted and no gold production will be realized during H2/2022. Current focus is on investigating partnership options for both the mine and the Orogrande processing plant operations. 
• At US Grant, Endomines is planning to undertake initial permitting activities and continue studies to define necessary development steps during H2/2022.
• Endomines updated its strategy, which appears to lean on Pampalo and other deposits and exploration at the Karelian Gold Line, while focus in the U.S. is shifting towards partnership models.

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• Dovre Q2 revenue grew by 38% y/y to EUR 47.3m, compared to our EUR 50.5m estimate. The growth was all organic, some 75% of it due to Renewable Energy. Project Personnel amounted to EUR 22.4m vs our EUR 22.9m estimate, while Consulting revenue landed at EUR 4.6m vs our EUR 4.5m estimate. Renewable Energy recorded EUR 20.3m, compared to our EUR 23.1m estimate.
• Q2 EBITDA came in at EUR 1.9m vs our EUR 1.4m estimate. EBIT was EUR 1.7m, compared to our EUR 1.2m estimate. Project Personnel EBIT amounted to EUR 0.9m vs our EUR 0.6m estimate, while Consulting was EUR 0.6m vs our EUR 0.6m estimate. Renewable Energy was EUR 0.4m, compared to our EUR 0.3m estimate. Other functions & unallocated cost EUR -0.2m vs our EUR -0.3m estimate.
• Dovre guides FY ’22 revenue to be more than EUR 185m and EBIT to be in the range of EUR 6.5-7.5m (unchanged).

Open report

Growth as expected, EBIT slightly above our estimates
Marimekko delivered solid topline growth in Q2 with net sales amounting to EUR 38.0m (Evli: 37.0m), representing 16% y/y growth. The growth was driven by strong retail sales in Finland and solid development of int’l sales. According to the company, int’l sales were impacted by unusual weightings of wholesale deliveries, partly indicating a strong comparison period. Gross margin remained at the comparison period’s level, thanks to a favorable sales-mix. With revenue growing nicely, Q2 EBIT improved to EUR 5.7m (Evli: 5.3m), reflecting an EBIT margin of 15%. However, increased fixed costs restricted the profitability improvement somewhat.

We made some marginal estimate adjustments
We slightly adjusted our near-term estimates mainly driven by the solid outlook provided for H2. We see the sales development strong given the company’s outlook and the brands ATH awareness. In 2022, we expect net sales in Finland to grow by 9% y/y to EUR 100.9m while our estimate for int’l sales is EUR 67.4m, reflecting y/y growth of 13%. Our group revenue estimate for 2022 amounts to EUR 168.3m. With increased cost pressures, we expect a 22E EBIT of EUR 32.6m (19.4% margin). In 2023, we expect group revenue to grow by 7% y/y, driven by both Finland (+5%) and int’l sales (+10%). Meanwhile, with gross margin improving slightly and the increase in fixed costs calming down, our 23E EBIT margin estimate is 19.7%.

HOLD with a target price of EUR 13.2 (14.5)
With the increased uncertainty and risks concerning the development of the market environment, we have downgraded our valuation multiples for Marimekko. We approximate Marimekko should be trading with 22-23E EV/EBIT multiples of 16-15x. Now the company trades below our TP, but with the earnings growth being moderate and upside potential not being massive, we retain our HOLD-rating and adjust TP to EUR 13.2 (14.5).

Open report

•    Q2 group result: net sales increased by 16% y/y to EUR 38.0m, which was broadly in line with our and consensus expectations (37.0/36.6m Evli/cons.). The growth was driven by domestic sales while international growth was a bit moderate. Gross margin was approx. flat y/y. With increased revenue, adj. EBIT amounted to EUR 5.7m (5.3/5.8m Evli/cons.), reflecting an EBIT margin of 15%. EPS amounted to EUR 0.12 (0.10 Evli/ cons.).
•    Finland: driven by strong retail sales, Finnish net sales increased by 25% y/y to EUR 23.0m (Evli: 20.5m). Wholesale sales were flat y/y.
•    Int’l: with y/y growth of 5%, net sales amounted to EUR 15.0m (Evli: 16.5m). The growth was driven by Scandinavia, the EMEA region, and the APAC region while North America saw low double-digit y/y decrease in its net sales. Int’l business was negatively impacted by a different kind of weighting of wholesale deliveries.
•    Category split: Fashion sales amounted to EUR 12.0m (+6% y/y). Home category grew by 11% y/y to EUR 16.9m. Bags and accessories showed strong y/y growth of 48% and amounted to EUR 9.0m.
•    Market outlook: Marimekko expects domestic sales to grow as well as APAC sales and int’l sales to increase significantly. Both retail and wholesale revenue are expected to increase in 2022. Licensing income is also estimated to be higher than that of the comparison period. In percentage terms, net sales growth is expected to be stronger at the beginning of 2022 than in H2.
•    FY’22 guidance intact: expecting revenue to grow and an EBIT margin ranging between 17-20%.

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Investments into growth in H1
Netum had provided preliminary figures ahead of H1 and the earnings report as such held no notable surprises. Net sales grew 47.8% y/y to EUR 15.4m, of which 22.6% was organic growth. The comp. EBITA increased by 14.0% y/y to EUR 1.8m, but the comp. EBITA-margin declined by 4.0%p. The number of employees grew to 263 (H1/21: 171) mainly from successful new recruitments but also the Cerion Solutions acquisition. H1 organic growth was supported by the increased workloads under long framework agreements and the continued high level of demand, while profitability was affected by front-loaded growth investments and increased sick leaves due to the pandemic.

Public sector exposure proving to be beneficial
Demand in the public sector, accounting for the majority of Netum’s net sales, has been and appears to continue to be at a high level, while the private sector has shown some more fluctuation. New recruitments have notedly become more challenging, but with the large number of recruitments made during H1, domestic geographical expansion, and high public sector demand coupled with long framework agreements, the near-term growth prospects remain solid. The wage inflation/customer pricing equation currently appears to be well manageable and although the current environment creates some margin pressure, we expect profitability to remain at healthy levels. We have made limited revisions to our estimates, expecting net sales growth of 42.5% (guidance >30%) and an EBITA-margin of 12.5% (guidance 12-14%).

BUY (HOLD) with a target price of EUR 4.5 (4.3)
Netum currently trades quite in line with peers. With continued confidence in the growth outlook through the public sector exposure, we adjust our TP to EUR 4.5 (4.3), valuing Netum at ~17x 2022e adj. P/E, and upgrade our rating to BUY (HOLD).

Open report

• Netum’s net sales in H1 amounted to EUR 15.4m (EUR 10.4m in H1/21), with preliminary figures provided pre-H1. Net sales grew 47.8% y/y, of which 22.6% was organic growth. Organic growth was attributable to increased workloads under long framework agreements and to the continued high level of demand.
• EBITA in H1 was EUR 1.7m (EUR 1.8m in H1/21) and comparable EBITA EUR 1.8m (EUR 1.6m in H1/21). Comp. EBITA increased by 14.0% y/y, but the comp. EBITA-margin declined by 4.0%p. Profitability was affected by growth investments and increased subcontracting as well as sick leaves caused by the pandemic.
• Operating profit in H1 amounted to EUR 0.9m (EUR 1.3m in H1/21), in line with our estimates (Evli EUR 0.9m), at a margin of 5.6%. 
• Earnings per share was EUR 0.04 (H1/21: 0.01) vs. our estimate of EUR 0.05.
• Personnel at the end of the period amounted to 263 (171).
• Guidance for 2022 (updated 8.8.2022): Netum expects its revenue to grow by at least 30% and the EBITA-margin to be 12-14%.

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Q2 results were overall quite close to estimates

Pihlajalinna grew 22% y/y; the EUR 174m revenue topped the EUR 170m/167m Evli/cons. estimates thanks to strong corporate as well as private customers, although the latter volumes are still lagging relative to 2019. Outsourcing profitability improved by EUR 0.7m y/y, despite continued high costs, due to efficiency measures, index adjustments and service fee refunds. H1 employee costs were exceptionally high by EUR 2.5m; the burden was slightly higher in Q1 than in Q2, but together with capacity additions (including four new private clinics) meant profitability excluding outsourcing fell by EUR 2.3m y/y in Q2. The EUR 16.9m adj. EBITDA was in line with estimates while the EUR 5.2m EBIT was a bit soft relative to the EUR 5.9m/6.3m Evli/cons. estimates.

We expect H2 improvement to be visible in Q4 profitability

Q3 absences have been lower so far, but the situation could again change over the fall. Capacity scales further up, however Pihlajalinna has already added most of its targeted level and hence higher utilization rates should drive profitability in H2. Pihlajalinna has also increased prices while inflation appears to be manageable. Q3 EBITA will remain burdened y/y, yet Q4 could achieve significant y/y improvement (Q4’21 was negatively affected, by some EUR 2m, by a spike in complete outsourcing specialized care costs while Covid-19 services revenue was still at a high level). High demand continues to support profitability, and H2 tends to be seasonally favorable, but short-term cost issues and Pohjola Hospital’s improvement pace create some uncertainty around H2 results. Meanwhile NIBD/EBITDA has been elevated, at least in the short-term, due to the various recent investments for which Pihlajalinna now looks to reap gains.

Long-term margin potential remains the big upside driver

We still don’t view the guidance challenging, although a positive revision may not arrive until around Q4; earnings growth should in any case continue next year. The 13x EV/EBIT valuation, on our FY ’23 estimates, is some 15% below peers’ while Pihlajalinna’s EBIT margin is likely to stay at least a third below a typical peer. Long-term upside potential hence continues to be meaningful. We revise our TP to EUR 12.5 (13.0) and retain our BUY rating.

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Net sales and profitability seen to be weaker than expected
Administer issued a profit warning on Friday, Aug 12th. The company now expects 2022 net sales of EUR 47-49m (prev. >EUR 51m) and an EBITDA-margin of 5-7% (prev. >8%). The lowering of the guidance is based upon the general economic uncertainty and the impact on customer activity. Higher than anticipated overlapping costs for the old and new system stemming from Administer’s subsidiary Adner’s system reform have also impacted profitability negatively during the current year. In addition, net sales from system consulting and expert services in connection with EmCe’s client projects have been slightly lower than the company had expected.

Organic growth and transactional volumes a concern
We have for now adjusted our estimates towards the mid-range of the new guidance and our 2022 EBITDA estimate is as such down by near 40%. In our view the lower customer activity due to the general economy is of more concern, as costs relating to the system reform should ease at some point and we hypothesize that the lower project-based revenue may at least partially be due to higher sick-leaves that have been seen in Finland during H1 due to the pandemic. Administer reports its H1/2022 results on August 31st. Inorganic growth plans have progressed according to communicated plans, with four acquisitions so far during 2022, and our interest in the results will be primarily oriented towards the noted factors affecting growth and the development of organic growth ambitions.

BUY-rating with a target price of EUR 4.0 (4.7)
Administer’s 2022 financials were known to be sub-par in 2022 due to previous challenges but the guidance downgrade brings an unfortunate dent in the growth and profitability trajectory. The company’s mid-term potential remains, but with the noted challenges we lower our TP to EUR 4.0 (4.7), BUY-rating intact.

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Demand still strong, inflation kicks in during H2 and 2023
The demand for fashion and lifestyle products has been strong in H1. We see the trend especially in fashion, bags, and accessories where the consumers have been renewing their wardrobe collections after COVID-19 lockdowns. In addition, Marimekko has consistently grown its brand awareness abroad which can be seen in a strong international growth. However, we see the inflation starting to kick in during H2 and 2023, and with the combination of low consumer trust and strong comparison figures, we see the growth slowing down in H2.

Q2 is driven by both domestic and international growth
We made no changes to our estimates ahead of the Q2 result. In Q2, with the favorable market environment, we expect revenue to amount to EUR 37.0m driven by domestic growth of 12% and international growth of 15%. We expect all markets, except North America, to see double-digit growth in Q2. We expect adj. EBIT to improve y/y to EUR 5.3m, but adj. EBIT margin of 14.3% to fall below the comparison period driven by softer gross margin and increased fixed costs. Our 2022 topline estimate is EUR 167.7m (+10% y/y) and EBIT is EUR 32.5m (19.4% margin). The company expects its 2022 revenue to be higher that of the comparison period and its EBIT margin to land within the range of 17-20%.

HOLD (BUY) with a target price of EUR 14.5
Marimekko is valued with 22-23E EV/EBIT multiples of 16-14.5x and 22-23E P/E multiples of 21-20x. The current valuation is quite neutral, but most of the undervaluation has shrunk since our last update. In our view, the visibility of H2 is somewhat uncertain and with inflation starting to kick in, we see that consumer demand could be diluted or skewing towards lower price point lifestyle goods. We downgrade our rating to HOLD (prev. BUY) and retain TP of EUR 14.5.

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Q2 figures well below expectations
Solteq reported weak Q2 figures. Revenue declined 3.0% y/y to EUR 17.9m (Evli EUR 19.9m) while EBIT fell clearly y/y to EUR 0.4m (Evli EUR 2.0m). Solteq Software performed well below expectations, with revenue of EUR 6.5m (Evli EUR 7.3m) and adj. EBIT of EUR -0.9m (Evli EUR 0.1m). Solteq Digital was also slightly below expectations due to some delays in the start of certain customer projects, but relative profitability still remained at a good level. Solteq still kept its guidance intact, expecting Group revenue to grow and profit to weaken.

Challenges to overcome in Utilities business
The main reason behind the weak Q2 figures was challenges relating to product development in the Solteq Utilities business. The Utilities business to our understanding suffered from a combination of rapid growth, having previously signed several significant orders, and non-sufficient standardization of products. As a result, resources were in sub-optimal use due to more time having to be spent on developing and improving products as opposed to project deliveries. The situation is being alleviated but we see that some catch-up will be seen during H2. The more fundamental issue relating to product development and standardization will likely be a lengthier process, and Solteq noted an updated strategy being worked on. Notably, Solteq did not amend its guidance, which implies expectations of good performance during H2.

BUY-rating with a target price of EUR 2.7 (3.4)
Valuation on our 2022e estimates is stretched, but we still see that the market demand, strategic focus on the Utilities business and recurring revenue potential support the investment case in the mid-term. With the near-term challenges and uncertainty, we adjust our TP to EUR 2.7 (3.4), BUY-rating intact.

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• Q2 revenue grew by 21.9% y/y and amounted to EUR 173.7m, compared to the EUR 169.5m/166.6m Evli/consensus estimates. Corporate customer revenue was EUR 56.0m vs the EUR 52.7m/51.8m Evli/consensus estimates, while private customers amounted to EUR 27.4m vs the EUR 22.4m/23.4m Evli/consensus estimates. Public sector customers came in at EUR 108.8m, compared to the EUR 113.0m/109.8m Evli/consensus estimates. Revenue grew 5.3% on an organic basis and customer volumes, excluding municipal outsourcing arrangements and Covid-19 testing, grew 69% y/y (28% without M&A transactions). Organic growth was at an especially good level in occupational health services and surgical operations.
• Covid-19 services revenue was EUR 3.2m in Q2 (EUR 8.2m a year ago).
• Adjusted EBITDA was EUR 16.9m vs the EUR 16.4m/17.0m Evli/consensus estimates, while adjusted EBITA was EUR 7.3m vs our EUR 7.9m estimate. Adjusted EBIT landed at EUR 5.2m, compared to the EUR 5.9m/6.3m Evli/consensus estimates. Employee benefit expenses were again exceptionally high due to sickness-related absences which increased costs by some EUR 2.5m. Meanwhile Pihlajalinna’s supply of appointments and imaging services grew by nearly 38%. The costs of complete outsourcing arrangements were still fairly high, but profitability improved slightly in Q2 thanks to efficiency improvement programs, index adjustments and service fee refunds.
• Pihlajalinna guides FY ’22 revenue to increase substantially, while adjusted EBITA is expected to be on a par with 2021 (unchanged).

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Telko especially will meet headwinds in H2 and FY ‘23

Aspo’s Q2 revenue grew by 16% y/y to EUR 161m vs the EUR 142m/148m Evli/cons. estimates. All segments hit revenues above our estimates, and the EUR 16.0m adj. EBIT clearly topped the EUR 9.3m/9.5m Evli/cons. estimates. H2 has typically been Aspo’s stronger half in terms of profitability but this year will be different, however the company seems headed close to EUR 50m FY ‘22 EBIT despite some softening in H2. It’s still very early innings in terms of Aspo’s updated compounder strategy, but the company appears poised to make further progress with M&A as well as ESL’s vessel pooling partnership.

ESL and Leipurin to deliver robust results in H2 and FY ‘23

ESL may not improve next year given the EUR 17m adj. EBIT in H1’22, yet outlook remains strong enough so that we wouldn’t expect a large EBIT decline either. Meanwhile Telko’s quarterly EBIT has recently jumped to the EUR 7-8m ballpark, compared to earlier levels of EUR 4-5m before raw materials prices shot up. Telko’s H2’22 EBIT may stay relatively high as most prices are yet to decline, but there’s a risk of reversion to more moderate levels by next year. Telko has many different product categories, and the overall price outlook appears stable although the risks tilt more towards downside. Telko has also placed more Western volumes recently, and against this backdrop our ca. EUR 4m quarterly EBIT estimates seem conservative. Leipurin closes the Kobia acquisition on Sep 1, which adds to our estimates in addition to the recent relatively strong organic performance.

Valuation continues to be undemanding

Our estimate revisions for H2’22 and FY ’23 come in relatively small. We estimate H2’22 EBIT at EUR 21.4m (prev. EUR 20.2m), while we see FY ’23 EBIT at EUR 43.4m (prev. EUR 39.0m). The increases are especially due to Leipurin as the company is making progress with its acquisition as well as the divestiture of the machinery business. Multiples are still not demanding, despite the inevitable short to medium term softening in EBIT, as Aspo is valued only around 8x EV/EBIT on our FY ’23 estimates. We update our TP to EUR 9.5 (8.5); we retain our BUY rating.

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Continued good growth, profitability on the softer side
Etteplan reported fairly good Q2 results despite some softness in profitability. Revenue grew 18.9% y/y (10.3% organic excl. FX) to EUR 89.3m (88.8m/89.9m Evli/cons.) and EBIT amounted to EUR 6.8m (7.4m/8.0m Evli/cons.). The performance in Engineering Solutions was very good and slightly above our estimates while Technical Documentation Solutions and Software and Embedded Solutions performed below expectations. Group profitability overall was affected by increased travel and personnel event/training related expenses along with increased sick leaves and holidays. Organizational restructuring measures were implemented in Software and Embedded Solutions due to a weakened operational efficiency. Guidance kept intact, expecting revenue of EUR 340-370m and EBIT of EUR 28-32m in 2022.

Earnings uncertainty increased heading into H2
Based on management comments the market environment is expected to remain at fairly decent levels despite the uncertainty and some fluctuations. Our estimates remain largely unchanged, having slightly lowered our profitability expectations following continued weaker profitability in Technical Documentation Solutions and Software and Embedded Solutions. A normalization of the high level of travel and personnel expenses in Q2 should slightly benefit profitability but the faced challenges relating to operational efficiency appear unlikely to be fixed in the very short-term.

HOLD-rating with a target price of EUR 16.0 (17.0)
Etteplan’s Q2 report overall was slightly on the softer and we perceive a slight increase in uncertainty related to the market environment, due to which we adjust our target price to EUR 16.0 (17.0), HOLD-rating intact. Etteplan’s valuation currently remains justifiably above the peer median but potential upside remains limited in the current environment.

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• Net sales in Q2 were EUR 17.9m (EUR 18.5m in Q2/21), below our estimates (Evli EUR 19.9m). Growth in Q2 amounted to -3.0% y/y. 
• The operating profit and adj. operating profit in Q2 amounted to EUR 0.4m and 0.6m respectively (EUR 2.4m/2.5m in Q2/21), clearly below our estimates (Evli EUR 2.0m/2.0m). 
• Q2 was challenging for Solteq, with main challenges caused by the development of software products in the Solteq Utilities business and the resulting increase in project delivery costs. Despite the challenges, the outlook for Solteq Group’s international and domestic business is estimated to remain positive.
• Solteq Digital: revenue in Q2 amounted to EUR 11.4m (Q2/21: EUR 11.9m) vs. Evli EUR 12.6m. Growth amounted to -4.1%. The adj. EBIT was EUR 1.5m (Q2/21: EUR 1.9m) vs. Evli EUR 1.9m. Demand in key business areas, such as digital business and commerce solutions, is expected to remain at a good level during the ongoing quarter.
• Solteq Software: Revenue in Q2 amounted to EUR 6.5m (Q2/21: EUR 6.6m) vs. Evli EUR 7.3m. The adj. EBIT was EUR -0.9m (Q2/21: EUR 0.6m) vs. Evli EUR 0.1m. Growth was -0.9%. The business outlook for Solteq Software is expected to remain positive.
• Guidance for 2022 (reiterated): group revenue is expected to grow and operating profit to weaken.

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• Net sales in Q2 were EUR 89.3m (EUR 75.0m in Q2/21), in line with our estimates and consensus estimates (EUR 88.8m/89.9m Evli/Cons.). Growth in Q2 amounted to 19% y/y, of which 10.3% organic growth.
• EBIT in Q2 amounted to EUR 6.8m (EUR 6.7m in Q2/21), below our estimates and consensus estimates (EUR 7.4m/8.0m Evli/cons.), at a margin of 7.6%. Profitability was affected by increased costs relating to employee training and social events, sick leaves and holidays, and organizational restructuring in the software business.
• EPS in Q2 amounted to EUR 0.22 (EUR 0.20 in Q2/21), slightly below our and consensus estimates (EUR 0.23/0.24 Evli/cons.).
• Net sales in Engineering Solutions in Q2 were EUR 46.2m vs. EUR 46.0m Evli. EBITA in Q2 amounted to EUR 4.9m vs. EUR 4.6m Evli. 
• Net sales in Software and Embedded Solutions in Q2 were EUR 25.1m vs. EUR 24.6m Evli. EBITA in Q2 amounted to EUR 1.9m vs. EUR 2.3m Evli. 
• Net sales in Technical Documentation Solutions in Q2 were EUR 17.7m vs. EUR 18.0m Evli. EBITA in Q2 amounted to EUR 1.5m vs. EUR 2.0m Evli. 
• Guidance for 2022 (intact): Revenue is estimated to be EUR 340-370m and the operating profit is estimated to be EUR 28-32m

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• Aspo Q2 revenue for continuing operations increased by 16% y/y to EUR 161.4m, compared to the EUR 142.0m/148.3m Evli/consensus estimates.
• Q2 adjusted EBIT was EUR 16.0m vs the EUR 9.3m/9.5m Evli/consensus estimates.
• ESL Q2 revenue amounted to EUR 60.3m vs our EUR 50.2m estimate, while adjusted EBIT landed at EUR 9.2m vs our EUR 6.3m estimate. All vessel categories’ profitability remained strong during the quarter. Demand looks to stay high at least over the course of H2.
• Telko’s top line was EUR 71.8m, compared to our EUR 68.5m estimate, whereas adjusted EBIT amounted to EUR 7.2m vs our EUR 4.2m estimate. Price levels remained high, and volumes grew especially in Western markets. Western sales are expected to stay at a relatively stable level, but significantly decreasing sales in Russia will drag revenue lower during H2. The overall outlook on prices seems to be somewhat stable.
• Leipurin Q2 revenue was EUR 29.3m vs our EUR 23.3m estimate. Adjusted EBIT came in at EUR 0.9m, compared to our EUR 0.3m estimate.
• Other operations cost EUR 1.4m, compared to our EUR 1.5m estimate.
• Aspo’s guidance remains unchanged as the company expects comparable operating profit to improve from previous year (EUR 42.4m).

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Suominen’s pricing will need to catch up some more in H2

Suominen’s Q2 revenue grew 4% y/y to EUR 118m, compared to the EUR 116m/118m Evli/cons. estimates. Americas’ EUR 64m top line was soft relative to our estimate despite the EUR 8m FX tailwind, however Europe continued to grow at a 16% y/y pace. We note neither Europe nor Brazil have seen inventory-related demand issues like the US. Group sales volumes improved just a bit q/q, in both Americas and Europe, but remained below the level seen a year ago as US customers still suffered from high inventories which have been blocking up the retail channel. The problem arose last summer and Suominen’s customers expected earlier inventories to have melted by the middle of this year. The problem has since eased somewhat, although not as fast as was expected. Sales prices continued to follow raw materials but not enough to fully compensate for the cost inflation, which resumed at a high single-digit q/q level in Q2. EBITDA thus fell to EUR 1.9m vs the EUR 7.0m/6.7m Evli/cons. estimates. Raw materials prices may now be stabilizing, however energy prices, especially in Italy, will continue to climb in H2.

Volumes are growing, yet cost inflation remains a nuisance

Q3 will mark an improvement thanks to growing volumes, as seen already in July, and higher prices as they continue to catch up with raw material inflation. Moist toilet tissue volumes are set to rise over the course of H2 thanks to US production line conversions, while Suominen has recently completed incremental investments in Italy and announced a EUR 6m production line upgrade in Finland. We do not hence view capacity utilization levels a pressing risk, however cost inflation remains an acute issue. We make some upward revisions to our H2 revenue estimates, but we revise our Q3 EBITDA estimate to EUR 7.4m (prev. EUR 10.8m). We see H2’22 EBITDA at EUR 20.5m.

Multiples aren’t demanding in the light of H2 improvement

We estimate a marked improvement for H2, although the level is still quite modest. Suominen is valued 4x EV/EBITDA and 7x EV/EBIT on our FY ’23 estimates, which aren’t very high levels on moderate estimates. We retain our EUR 3.5 TP and BUY rating.

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• Suominen Q2 revenue grew by 4% y/y to EUR 118.0m vs the EUR 116.0m/118.4m Evli/consensus estimates. The impact of currencies was EUR 8.0m. Americas landed at EUR 64.2m, compared to our EUR 67.0m estimate, while Europe amounted to EUR 53.8m vs our EUR 49.0m estimate. Overall sales volumes improved slightly q/q but remained well below y/y. Suominen has widened its product portfolio in the US for the production lines suffering from inventory imbalances and expects improved demand in H2’22 based on new contracted volumes.
• Gross profit came in at EUR 5.0m, compared to our EUR 9.3m estimate. Gross margin was 4.2% vs our 8.0% estimate. Q2 did not see an improvement in demand for the hard surface disinfectant products which have caused trouble in the US supply chain. Cost inflation also continued in Q2, especially in Europe.
• Q2 adjusted EBITDA was EUR 1.9m vs the EUR 7.0m/6.7m Evli/consensus estimates, while EBIT was EUR -2.9m vs our EUR 2.0m estimate. Fixed cost savings had a small positive impact on the result.
• Suominen guides comparable EBITDA to decrease clearly in 2022 (unchanged).

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Q1 results were better than expected despite many burdens

Pihlajalinna’s Q1 results delivered a positive surprise as both revenue and EBIT topped estimates. Organic growth amounted to 7%, driven by corporate customers where the Pohjola Hospital acquisition was an additional help to top line. The integration process went clearly better than expected over the first few months while outsourcing profitability also improved. Surgical operations performed better than the company expected in Q1. There were a few factors in Q1, in addition to the integration process, which limited profitability and are likely to do so at least to some extent also in Q2. High levels of sick leaves (+50%) due to the pandemic led to exceptionally high employee costs as Pihlajalinna had to resort to substitutes. Meanwhile Covid-19 services revenue continues to decline and is no more very profitable. Pihlajalinna is at the same time scaling up capacity in anticipation of near future demand, all of which means Q2 profitability will remain modest relative to long-term potential.

Focus rests on improvement over the course of H2

We make only marginal estimate revisions ahead of the report. We expect flat profitability q/q, at EUR 7.9m in terms of adj. EBITA, or down by EUR 1.0m y/y. We estimate top line growth to have increased to 19% y/y as Q2 was the first quarter in which Pohjola Hospital was included from the beginning. The report will update on the integration process; the acquisition reached positive results in two months, and progress has likely continued over the summer. The report may also provide an update on certain outsourcing restructuring negotiations. We do not view the FY ‘22 guidance for flat adj. EBITA challenging and, although there are many moving parts, we consider a guidance upgrade likely during or after Q3.

Valuation not demanding considering the margin upside

Pihlajalinna’s valuation is still not too challenging as the earnings multiples are well below peers’ (by some 20%) while profitability margins only begin to catch up. Peer multiples have however faced headwinds in the past three months and hence we adjust our TP to EUR 13 (14). We retain our BUY rating.

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Solid growth in H1 but softness in profitability
Netum provided preliminary information on its H1 results and lowered its earnings guidance. Netum’s revenue growth was faster than anticipated, up 47.8% y/y to EUR 15.4m (Evli EUR 14.1m). EBITA amounted to EUR 1.7m (Evli EUR 2.0m), with the EBITA-margin falling to 11.2% of revenue (H1/2021: 17.1%). Netum lowered its earnings guidance for 2022, now expecting an EBITA-margin of 12-14%, having previously expected to achieve an EBITA-margin of at least 14%. The company’s revenue is intact, with revenue expected to grow over 30% y/y. The lowered earnings guidance is due to larger than expected investments in personnel growth made in the first half of 2022, a higher than usual volume of subcontracting, sick leaves caused by the coronavirus and the general cost increase.

Announcement in our view neutral/slightly positive
The lower relative profitability is slightly on the negative side but given that the cost increase appears to be largely related to enabling growth, coupled with a good demand and faster than anticipated H1 growth, the development in our view is more on the neutral/slightly positive side. The revised guidance also implies profitability improvements in H2, but the development of the company’s cost base will still be something to watch going forward. We have revised our estimates, now expecting 2022 revenue of EUR 31.9m (prev. 29.6m), a y/y growth of 42.4%, and an EBITA of EUR 3.9m, (prev. 4.2m) for a 12.4% EBITA-margin.

HOLD-rating with a target price of EUR 4.3
We retain our target price of EUR 4.3 and HOLD-rating. Our TP values Netum at 16.1x and 11.9x 2022e and 2023e P/E (goodwill amort. adj.). We consider a premium to peers justified given the rapid growth and still rather healthy profitability, with the current valuation level rather fair given some uncertainty.

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• Netum provided preliminary information on its H1/2022 result and lowered its earnings estimate.
• Netum’s revenue during H1/2022 grew 47.8% from the previous year and amounted to EUR 15.4m (Evli EUR 14.1m). EBITA was EUR 1.7m (Evli EUR 2.0m) or 11.2% of revenue.
• Netum lowered its earnings estimate for the year 2022, expecting EBITA to be approximately 12–14% of revenue (prev. over 14%). The Group’s revenue estimate for 2022 is intact, with revenue expected to grow at least 30% from the previous year.
• The company's profitability estimate is lowered due to the larger than expected investments in personnel growth made in the first half of 2022, a higher than usual volume of subcontracting, sick leaves caused by the coronavirus and the general cost increase.
• Overall, the news is in our view slightly more on the positive side despite the profitability guidance downgrade given the rapid growth in the first half of the year and as the guidance implies expectations for improved profitability during H2. We had estimated a 2022 EBITA-margin of 14.3% and the difference to the mid-point of the new guidance is thus small.
• Netum will publish its H1/2022 report on August 16th.

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Q2 profitability faced a couple of headwinds

Scanfil Q2 top line grew 23% y/y to EUR 213m vs the EUR 202m/213m Evli/cons. estimates. Growth was 11% when excluding the spot component purchases; 3% was due to inflation and thus underlying comparable growth was ca. 8%, neatly above the 5-7% long-term organic target. Advanced Consumer Applications didn’t achieve much growth without the transitory invoicing items, but other than that demand remained favorable for all segments. EBIT landed at EUR 10.1m vs the EUR 11.3m/11.2m Evli/cons. estimates. The miss can be attributed to the FX loss which was mainly due to strong USD; Scanfil has since put hedges into place, although it’s still not entirely immune to FX moves. Lockdowns in China also hit profitability in Suzhou during the spring, but the situation has since normalized.

Component shortages seem to be easing already

The component availability situation has been a nuisance for well over a year, but there are now signs of improvement. Scanfil sees Q3 spot market purchases already lower than in Q2 yet still somewhat high. The stabilizing component situation will help productivity and profitability going forward, and Scanfil looks to manage its elevated inventory levels down. This easing should be a major factor in helping H2 EBIT higher; Scanfil’s guidance implies meaningful EBIT margin improvement for H2 without any significant changes in product mix. Late increases in production space mean Scanfil can meet high customer demand at least in the short-term, while M&A remains a likely tool for potential larger increases in manufacturing footprint.

Profitability has room to improve quite a bit more

Scanfil may not achieve significant top line growth next year as the spot market purchases fade away, however that should not limit absolute profitability potential. Scanfil’s 7% long-term EBIT margin target remains a relevant benchmark, but it is likely to take at least a few more years to reach that level. Scanfil is valued 7.5x EV/EBITDA and 10x EV/EBIT on our FY ’22 estimates. The multiples are in line with peers’ while Scanfil’s margins top those of the typical peer. We retain our EUR 8 TP and BUY rating.

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Q2 results slightly better than expected
CapMan reported slightly better than expected Q2 results. Turnover amounted to EUR 17.7m (EUR 16.5m/17.8m Evli/cons.) while operating profit amounted to EUR 14.1m (11.5m/11.9m Evli/cons.). The Management company business performance was in line with expectations (EBIT 6.1m/6.1m act./Evli), with 3.2m in carried interest (Evli EUR 3.0m) mainly from CapMan’s growth Equity fund. The Services business growth pace increased, and the business area exceeded our expectations on growth and profitability. The main deviations to our estimates came from fair value changes (EUR 9.8m/6.0m act./Evli) aided by the Picosun exit, CapMan’s largest exit measured by exit value. A one-off cost of EUR 1.4m due to the early vesting of CapMan’s 2020 performance share plan had a negative impact on costs.

Good overall expectations for H2/2022
Our 2022 estimates revisions roughly correspond to the deviation in our Q2 estimates and actual figures, now expecting an operating profit of EUR 65.1m (2021: 44.6m). The carry potential remains in place, noting however the uncertainty relating to timing and magnitude. On-going and completed deals post-Q2 provide additional support for continued solid investment returns. AUM growth is supported by the Infra II fund (recent first close) and the new Social Real Estate strategy fund (first close H2/22e) along with other on-going fund raisings and open-ended products. We expect the net AUM growth pace to slightly slow down following increased exits.

BUY-rating with a TP of EUR 3.4
Without larger changes to our estimates or views we retain our TP of EUR 3.4. Valuation remains favourable, with 2022e P/E at just below 10x. The high share of uncertain earnings from carry and investment returns remains a limiting factor for valuation upside, support is provided by growing dividend payments.

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Inflation and certain low project volumes hurt Q2 results

Enersense’s Q2 top line declined 3% y/y to EUR 59.8m. The softness was mostly due to Smart Industry, where e.g. lower Olkiluoto project volumes explained the fall. The war also led to project delays, and the ICT strike hurt volumes within Connectivity (it also suffered from inflation particularly due to fuel). Inflation, which in the case of Enersense mostly means higher metal and fuel prices, is especially a problem in the Baltics, where long contracts also add to the pain. International Operations thus saw a marked decline in profitability even when revenue grew by 14% y/y. Existing framework agreements suffer from inflation, although Enersense has been able to make some progress in adjusting their rates for higher costs. Power fared relatively well due to its more dynamic nature of business.

Enersense continues to work towards its targets

Inflation was a major issue as adj. EBITDA fell to EUR -0.4m from EUR 4.8m a year ago. Enersense sees Q3 as the most profitable quarter also this year even though inflation continues to hurt results in H2. Investments in offshore wind capabilities will still be a burden in H2, in addition to which ERP investments are set to continue for a few years. H2 profitability will remain far below potential, but volumes continue to grow as recent orders announced over the summer indicate. There are also no major issues with e.g. labor availability. Enersense recently announced the acquisition of Voimatel to add to Connectivity and Power, but the deal still waits for competition authority approvals.

Valuation appears broadly in line with peers

We cut our FY ’23 adj. EBITDA estimate to EUR 16.7m from EUR 22.2m due to the current challenges. Enersense is valued some 5.5x EV/EBITDA and 12x EV/EBIT on our FY ’23 estimates. The earnings multiples are broadly in line with those of peers; there remains much uncertainty around next year’s margins, but our estimated 2.9% EBIT is still not that high a level. Enersense’s multiples are close to Eltel’s, and the two are also similar in the sense that FY ’22 results are set to be modest for both. Our new TP is EUR 6 (8); we retain our HOLD rating.

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• Scanfil Q2 revenue grew by 23% y/y to EUR 212.9m, compared to the EUR 201.7m/212.5m Evli/consensus estimates. Transitory component invoicing amounted to EUR 29.5m during the quarter. Customer demand was generally strong in all customer segments, however poor availability of electronic components remained a challenge. Spot market component purchases will remain high at least in Q3.
• Advanced Consumer Applications amounted to EUR 68.7m vs our EUR 64.6m estimate, while Energy & Cleantech was EUR 53.5m vs our EUR 54.2m estimate. Automation & Safety landed at EUR 45.6m, compared to our EUR 41.6m estimate.
• Q2 adjusted EBIT came in at EUR 10.1m vs the EUR 11.3m/11.2m Evli/consensus estimates. There was an FX loss of EUR 1.4m, mainly due to the strengthening of the US dollar. China’s lockdown measures affected the Suzhou factory’s profitability especially in April, but the level returned to normal in May and June. Scanfil’s guidance also implies strong H2 profitability.
• Scanfil guides EUR 800-880m in revenue and EUR 43-48m in adjusted EBIT for FY ’22.

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• Enersense Q2 revenue amounted to EUR 59.8m, down by 2.9% y/y. Power revenue grew 17% y/y to EUR 14.0m, while International Operations grew by 14% to EUR 16.8m. Smart Industry declined by 20% to EUR 18.7m and Connectivity by 10% to EUR 10.2m.
• Q2 adjusted EBITDA was EUR -0.4m, compared to EUR 4.8m a year ago. Profitability declined the most in Smart Industry, followed by Connectivity and International Operations, whereas Power managed relatively strong absolute EBITDA. Inflation was a major negative affecting the results throughout the group, but there were also some project volume issues as well as the six-week ICT strike in Finland which had an impact on Connectivity. H1’22 adjusted EBITDA also includes EUR 2.4m in investments in offshore wind power and a new ERP system.
• Order backlog amounted to EUR 295.4m at the end of Q2. The order backlog contracts partially reflect increased pricing adjusted for inflation, whereas new contracts better reflect the cost pressure.
• Enersense guides EUR 245-265m in revenue and EUR 6-12m in adjusted EBITDA for FY ’22. Inflation continues to cast uncertainty over H2’22 results and project starts may also be delayed.

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We don’t see any big news behind the guidance revision

Dovre specified its guidance somewhat earlier than we would have expected. The old guidance suggested revenue above EUR 165m and EBIT of more than EUR 6.1m, whereas the new guidance is for revenue above EUR 185m and EBIT in the range of EUR 6.5-7.5m. Our previous estimates were respectively for EUR 200.9m and EUR 8.4m. Dovre sees no negative changes in demand, which we do not consider especially surprising considering the three segments’ favorable positioning within energy markets as well as the Norwegian civil and infrastructure sectors. Our updated FY ‘22 revenue and EBIT estimates stand at EUR 199.1m and EUR 7.4m respectively.

Renewable Energy is operating in a busy environment

We leave our FY ’22 estimates for Consulting intact ahead of the report. We make minor downward revisions for Project Personnel; the segment had a very strong Q1 thanks to its favorable positioning within the Norwegian oil & gas sector. We previously estimated 4.2% EBIT margin for FY ’22, but we revise the estimate slightly down to 4.0%. We continue to expect similar levels for the coming years, although we don’t consider 5% EBIT that challenging as a long-term target. Our downward revisions concern mostly Renewable Energy. We would expect the specialty construction business to proceed mostly according to plan as Suvic is set to deliver some EUR 90m in Finnish wind farm projects this year. Materials challenges, including steel availability and prices, have not come as a surprise, but there’s still some uncertainty around execution and supplier networks given the current high demand. We thus revise our EBIT estimate for Renewable Energy down to EUR 2.8m from EUR 3.6m.

Still more earnings potential over the following years

We estimate Dovre’s FY ’22 EBIT margin at 3.7%, down from our previous estimate of 4.2%; in our view all three segments have further potential to improve beyond this year. Earnings growth outlook remains solid as before, while there have been no major changes in peer multiples. Dovre is valued around 9x EV/EBIT on our FY ’22 estimates, and SOTP valuation still implies upside. We retain our EUR 0.70 TP and BUY rating.

Open report

Some improvement should already be visible

Suominen’s Q1 figures were very soft, largely as expected although the EUR 3.3m EBITDA was somewhat below estimates. Q2 profitability is to remain at a modest level due to the spike in European energy costs, which in the case of Suominen amounts to mostly electricity. We believe the energy surcharge Suominen announced in Q1 will help Q2 profitability to improve q/q, however we estimate EBITDA to have declined more than 50% y/y to EUR 7.0m. We note raw materials prices surged at double-digit rates in H1’21, and even though there were some signs of stabilization before the war price levels have continued to advance over the spring and summer months. Suominen’s nonwovens pricing therefore continues to catch up with higher raw materials costs at least over this summer.

H2’22 EBITDA should be clearly better than the recent lows

We make only marginal estimate revisions ahead of the report. US demand may still fluctuate on a quarterly level due to the supply chain issues, but we expect Americas revenue to be up by 4% this year relative to last, when especially Q3 figures received a hit. Strong dollar will help top line and we estimate 6% growth for this year. The estimated EUR 469m revenue would be above the previous record of EUR 459m seen in FY ’20, however weak H1’22 profitability means FY ’22 EBITDA will stay far below the previous record. Suominen’s EBITDA amounted to only EUR 13m in H2’21 and we estimate the figure to have declined even lower, to EUR 10m, in H1’22. It remains unclear how much the figure will improve in H2’22 as cost inflation has not abated from the agenda; we estimate the figure at EUR 23m.

Valuation multiples are low on modest earnings levels

Suominen’s earnings can deviate a lot from those of its peers, but valuation is by no means challenging considering the low level from which profitability is likely to bottom out this year. Suominen trades around 4x EV/EBITDA and 6.5x EV/EBIT on our FY ’23 estimates. The level implies a discount of 50% relative to peers while we don’t consider our margin estimates for FY ’23 very challenging. We retain our EUR 3.5 TP and BUY rating.

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SBU and IBU performed well
The strong growth of IBU and SBU wasn’t enough to offset the declined medical segment and Q2 group revenue decreased by 3.3% y/y. MBU suffered from a temporary supply chain issue and its topline decreased by 25.2% y/y while driven by all market segments, IBU and SBU recorded strong double-digit y/y growth of 29.4% and 25.4% respectively. The growth rate could have been higher as some sales were postponed due to the above-mentioned reasons as well as DT’s and its customers’ challenges to acquire components. With lower volumes, spot-component purchases, and increased logistic and R&D costs, DT’s margins tightened, and EBIT fell below the comparison period to EUR 1.2m (5.2% margin).

Demand is expected to further pick up
DT reiterated its guidance for H2, expecting double-digit growth both in Q3 and H2. Furthermore, the company clarified BU level outlook for Q3; expecting MBU and SBU to see double-digit growth while IBU is expected to grow. We foresee some uncertainty in the industrial markets with the global industrial activity decreasing. Meanwhile, we see IBU positioned well in its markets and expect the business to deliver growth even during uncertain times. Furthermore, the company’s management noted that the demand in all segments is picking up.

HOLD with a TP of EUR 20.0
We made only minor changes to our near-term net sales estimates while with soft Q2 profitability and increased cost pressures, our 22E EBIT estimate declined significantly. However, with net sales increasing and component availability improving, we expect 23E EBIT to improve significantly. In our view, with a 23E EV/EBIT multiple of 14x, the company’s valuation is quite neutral. The market environment however includes some uncertainty given signs of the global economy slowing down. We retain our HOLD-rating and TP of EUR 20.0.

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• Revenue in Q2 was EUR 17.7m (EUR 11.9m in Q2/21), slightly above our estimates and in line with consensus estimates (EUR 16.5m/17.8m Evli/Cons.). Growth in Q2 amounted to 49% y/y.
• Operating profit in Q2 amounted to EUR 14.1m (EUR 11.3m in Q2/21), above our estimates and consensus estimates (EUR 11.5m/11.9m Evli/cons.), at a margin of 79.8%. Compared with our estimates the difference was primarily due to higher than estimated fair value changes (EUR 6.0m/9.6m Evli/act.).
• EPS in Q2 amounted to EUR 0.07 (EUR 0.06 in Q2/21), above our estimates and consensus estimates (EUR 0.06/0.05 Evli/cons.).
• Revenue in Management Company business in Q2 was EUR 14.5m vs. EUR 14.2m Evli. Operating profit in Q2 amounted to EUR 6.1m vs. EUR 6.1m Evli. 
• Revenue in Investment business in Q2 was EUR 0.0m vs. EUR 0.0m Evli. Operating profit in Q2 amounted to EUR 9.6m vs. EUR 5.8m Evli. 
• Revenue in Services business in Q2 was EUR 3.2m vs. EUR 2.3m Evli. Operating profit in Q2 amounted to EUR 1.7m vs. EUR 1.0m Evli. 
• Capital under management by the end of Q2 was EUR 4.8bn (Q2/21: EUR 4.3bn). Real estate funds: EUR 3.2bn, private equity & credit funds: EUR 1.1bn, infra funds: EUR 0.5bn, and other funds: EUR 0.1bn.

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• Group results: Q2 net sales topped our estimates and decreased by 3.3% y/y to EUR 22.8m (22.4/22.5m Evli/cons.). Demand would have allowed for a higher growth rate in sales, but component shortages and temporary setbacks in supply chain postponed sales to Q3. The postponed sales, spot purchases, and increasing logistics and product development costs eroded DT's profitability. Adj. EBIT amounted to EUR 1.2m (1.8/1.8m Evli/cons.), implying an EBIT margin of 5.2%. Q2 EPS amounted to EUR 0.05 (0.09/0.10 Evli/cons.).
• Medical (MBU): In line with DT’s guidance, MBU’s net sales saw a significant y/y decrease of 25.2%, amounting to EUR 10.1m (Evli: 10.6m). Soft development was attributed to the one-off technical problems at two sub-suppliers and challenges of both the company and its customers to acquire critical components.
• Security (SBU): SBU sales came in strong, by showing y/y growth of 25.4%. Net sales amounted to EUR 8.6m (Evli: 8.1m). DT’s customer base widened, and net sales growth was driven by all market segments, also aviation which took a huge hit from the pandemic.
• Industrial (IBU): IBU continued its solid sales development by growing by 29.4% y/y with net sales amounting to EUR 4m (Evli: 3.7m). The growth was driven by all main market segments, especially the food industry.
• Outlook: DT expects to see double-digit growth in Q2 and H2. In Q3, the company expects MBU and SBU to grow with double-digit figures while IBU is expected to grow. Demand for imaging solutions is expected to pick up in all BUs.

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Net sales and EBIT to decline in Q2
In June, DT downgraded its outlook for Q2’22 with a product quality issue in its supply chain and the challenges for the company and its customers to purchase other critical components. With the company now expecting Q2 net sales to decline y/y, our net sales estimate amounts to EUR 22.4m (22.5m cons.), representing a y/y decline of 4.8%. We expect SBU and IBU to see nice double-digit growth with SBU benefiting from the recovery of aviation solutions, but MBU to decline by 22%, driven by the above-mentioned factors. With a substantial decline in topline, we also expect EBIT to be below that of the comparison period and amount to EUR 1.8m (8.1% margin). The consensus estimate for EBIT is 1.8m.

Demand still on a good level, supply chain issues to ease
The outlook for H2 is brighter with the supply chain issues easing. Some medical OEMs have indicated that component supply would improve in H2’22, which is in line with DT’s outlook, providing group-level growth. DT has also mitigated its exposure to component shortage and has modified its products so that the need for most poorly available components will be reduced during H2. With that, we expect the company to see strong 20% y/y growth in H2 driven by all BUs.

Valuation neutral ahead of Q2, but risks are elevated
DT trades with 22-23E EV/EBIT multiples of 18-13x. We find the current valuation quite neutral as with our estimates the company’s valuation is roughly in line with its peer group (based on 22-23E EV/EBIT). However, the market environment contains multiple risks, such as the war in Ukraine, high inflation rates, interest rate hikes, and slowing economic growth and industrial activity which might affect DT’s short-term performance. With our estimates intact, we retain our HOLD-rating and TP of EUR 20.0 ahead of Q2 result.

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Nordics are coping with inflation, but H2 will still be soft

The EUR 208.6m Q2 revenue was soft vs the EUR 216.5m/215.2m Evli/cons. estimates. Finnish ICT strike hit top line in addition to a late spring, while Denmark suffered from low volumes as Eltel expected but more than we estimated. The other units’ top lines were above our estimates, but inflation was a lot bigger burden than we estimated: EBIT fell to EUR 0.4m vs the EUR 3.6m/3.2m Evli/cons. estimates. Finland performed better than we estimated despite inflation, which affected through its large Power business. Sweden improved the most in Q2, but the results beyond Finland and Sweden were clearly below our estimates. Inflation cover within frame agreements isn’t a major issue in Finland, Sweden and Denmark, whereas in Norway higher costs are yet to be addressed to a similar extent. Fuel and materials had ca. EUR 4m H1 impact and the level should be similar in H2.

We expect key markets to drive growth again next year

The inflation challenge is not that bad in the Nordics but remains a major issue in Poland, where it’s unclear how long beneficial outcomes might take to materialize. The possible divestiture of Poland has been on the agenda since last autumn, and a decision could be reached by the end of this year. Eltel’s long-term improvement path can still be seen as Finland and Sweden appear to continue firm on their own tracks. Meanwhile further progress should be expected from Norway and Denmark since both have recently signed large Communication agreements. We estimate Eltel to return to earnings growth again next year, however the weak H1 as well as the continued cost pressure over H2 imply FY ’22 will be a gap year in profitability terms.

Valuation appears fair in the light of margin potential

We shave our H2’22 EBITA estimates by EUR 5.3m, whereas our updated estimate for FY ’23 amounts to EUR 17.3m (prev. EUR 26.3m). Eltel is valued 5x EV/EBITDA and 14x EV/EBIT on our FY ’23 estimates, the former implying a discount to peers while the latter is a premium. We don’t consider valuation too challenging in the light of Eltel’s margin upside potential, however there’s still way to go before Eltel will be near its peers’ profitability. Our TP is now SEK 9 (10); we retain our HOLD rating.

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• Eltel Q2 revenue decreased by 0.8% y/y to EUR 208.6m, compared to the EUR 216.5m/215.2m Evli/consensus estimates. Denmark’s top line was particularly soft, while Sweden and Norway advanced.
• EBIT was EUR 0.4m vs the EUR 3.6m/3.2m Evli/consensus estimates. Operative EBITA amounted to EUR 0.5m, compared to our EUR 3.7m estimate. Inflation was the main culprit for the weak numbers, however elevated sick-leave rates due to the pandemic as well as the late arrival of spring also contributed. Eltel has secured agreements with most of its customers to recover parts of the cost increases, but the company will not be able to recover the costs in full.
• Finnish profitability remained a bright spot in Q2 despite a six-week strike among ICT personnel. Swedish results continued to improve, while Norway and Denmark faced setbacks, the latter especially so.
• Eltel removed guidance in connection with the Q1 report.

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New Western orders will henceforth help profitability

Q2 top line fell 16.5% y/y to EUR 29.6m vs our EUR 38.0m estimate. The shortfall was due to projects, in particular Russian orders, whereas services figured above our estimate. The war led Raute to temporarily pause operations and assess the Russian order book, while the Chinese lockdowns induced production transfers. One-off issues led to EUR 11m in items, but cost inflation also affected the results more than we had estimated and thus Q2 EBIT was EUR -15.1m vs our EUR -10.7m estimate. Bottom line will now improve but we expect at least Q3 EBIT to stay negative due to inflation. Meanwhile services profitability is not suffering that much, in addition to which Q2 order intake amounted to EUR 40m vs our EUR 30m estimate. Demand has held up and there were again no large orders.

We would expect positive EBIT early next year at the latest

Order intake in Europe and Asia, excl. China where the situation is yet to normalize, drove the figure above our estimate. North American orders were soft relative to our estimate after high Q1, but demand there is strong. There’s more uncertainty around European demand, but the Baltics and Eastern European countries are bright spots. The overall outlook and the EUR 104m order book is not bad considering it has now been mostly cleaned of Russia while Raute has been able to book EUR 40m in new quarterly orders even without any large ones. Smaller order demand related to modernization and automation remains high on customers’ agenda. Raute’s outlook for the coming years could improve with larger orders, however EBIT will stay at a modest level for several quarters to come. Investments in R&D remain high, while Raute has a program to improve profitability.

High uncertainty but long-term multiples are undemanding

We make minor revisions and still expect positive EBIT for FY ’23, although it looks set to be a modest one. Raute trades 9x EV/EBIT on our FY ’23 estimates; next year’s EBIT is likely to stay far below potential, and valuation isn’t challenging in the long-term context. There’s however still much uncertainty and hence we view valuation fair. We retain our EUR 11 TP and HOLD rating.

Open report

Q2 results quite as expected
Consti reported Q2 results which overall corresponded well with expectations. The prolonged winter had a small impact on net sales growth, with growth nonetheless at 3.1% y/y to EUR 73.1m (EUR 74.6m/74.7m Evli/Cons.). The operating profit amounted to EUR 2.9m (EUR 3.0m/2.9m Evli/cons.), at a margin of 4.0%. The increase in construction materials prices had a greater impact than in the comparison period in certain on-going projects and inflation increased indirect costs. The order backlog was at a quite good level of EUR 240.8m, up 1.9% y/y, with a Q2 order intake of EUR 98.7m (98.5m). The 2022 operating profit guidance of EUR 9-13m was kept intact.

Near-term uncertainty still present
We have made only smaller adjustment to our estimates, till expecting relative growth to pick up slightly during the end of the year for an overall modest full-year growth. Our 2022e operating profit estimate is slightly below the guidance mid-point, at EUR 10.4m. The near-term demand situation remains affected by current uncertainties, especially within corporate customers. The situation with construction material prices and availability still has an impact, although smaller within renovation projects. Some indications of price peaks have been seen, but the uncertainty should still most likely be present at least throughout the year.

BUY with a target price of EUR 12.0
Despite the prevailing market situation and uncertainties Consti has in our view performed well and we remain rather optimistic also for the coming quarters. Long-term drivers still remain. Compared with peers the current valuation remains quite cheap. We keep our target price of EUR 12.0 intact, rating still BUY.

Open report

IM driving group topline growth, EBIT bit softish
Vaisala’s net sales grew nicely, by 10% to EUR 120.5m. The growth was mainly driven by the IM business unit (+24% y/y) while W&E’s revenue was approx. flat y/y. Vaisala managed to hold on to its margins and the group gross margin was on a solid level at 52.3%. The company continued its investments in its future growth and operative costs increased according to its plans. To our understanding, part of increased costs is short-term that will scale eventually after the IT-system update has been complete. EBIT decreased by 5% y/y, and fell short of our expectations, to EUR 10.3m (8.6% margin).

Guidance reiterated, some uncertainty ahead
Vaisala reiterated its FY’22 guidance; net sales between EUR 465-495 and EBIT between EUR 55-70m. With IM’s market demand continuing strong and W&E’s order book being all-time-high, we consider the company achieving its guidance easily. However, with the COVID-19 situation in Asia continuing, the war in Ukraine not ending, and the low visibility of component availability, H2 includes some uncertainties that might affect the company’s performance. We slightly adjusted our estimates; 2022 net sales estimate of EUR 491.1m nears the upper bound of the guidance range while with cost pressures being elevated, our EBIT estimate of EUR 58.2 is below the mid-point of the guidance range.

HOLD with a target price of EUR 43.0 (45.0)
We made only minor upward adjustments to our topline estimates while we adjusted our short-term EBIT estimates downwards driven by increased costs pressures stemming mainly from the company’s increased investments in its future growth. Vaisala continues to trade above its peer group, with approx. 40% premium. We adjust our TP to EUR 43.0 (45.0) and retain HOLD-rating.

Open report

Q2 profitability exceptionally good
SRV reported good Q2 results in term of P&L figures. Revenue was on par with comparison period figures at EUR 211.4m (EUR 191.7m/219.0m Evli/cons.), while profitability was above expectations, with an operating profit of EUR 10.1m (EUR 4.1m/5.5m Evli/cons.). The relative profitability was exceptionally good and not expected to be as high during H2. The order backlog development remained unfavourable, at EUR 745.9m at the end of Q2. H1 contained new agreements of EUR 202.4m. SRV specified its guidance, now expecting revenue of EUR 800-860m (prev. 800-950m) and an operative operating profit of EUR 15-25m (prev, >5.3m), which compared with our pre-Q2 estimates is slightly on the weaker side but understandable given the current market situation.

Current uncertainty threatening growth outlook
We have lowered our 2022 revenue estimate by 5% while our operative operating profit estimate is essentially intact nearer the upper end of the new guidance. We have lowered our estimates somewhat for 2023. Although SRV currently has EUR 1.3bn in won projects that are not yet entered into the order backlog, with the current uncertainty, order backlog development and lack of developer contracting housing unit start-ups we currently see limited signs of growth. Cost pressure is also still clearly present, but at least in some areas peak increases appear to be behind and the sector in general appears to have coped quite well with the pressure so far. With the completed financing arrangements SRV is now virtually net debt-free (excl. IFRS 16), thus clearly improving the risk profile.

HOLD with a TP of EUR 5.0 (prev. 0.18 pre-reverse split)
Following revisions to our estimates and with the reverse split completed in July we adjust our target price to EUR 5.0 (prev. 0.18) and retain our HOLD-rating. Our target price values SRV at around 6x EV/EBIT.

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• Group result: Q2 orders received grew nicely to EUR 131.9m (+10% y/y) and the order book amounted to EUR 182.9m (+11% y/y). Net sales grew by 10% y/y to EUR 120.5m, being slightly above our expectations (EUR 118.1m/118.1m Evli/cons.). With smart pricing decisions and a favorable sales mix, the gross margin was flat y/y despite continued spot component purchases. Fixed costs increased by 19% and EBIT came in below our expectations at EUR 10.3m (EUR 12.5m/14.6m Evli/cons.), reflecting an EBIT margin of 8.6%. EPS amounted to EUR 0.18 (EUR 0.26/0.32 Evli/cons.).
• Industrial measurements (IM): Driven by industrial instruments, life science, and power, IM’s orders saw a strong y/y increase, amounting to EUR 56.2m. Order book was 43% higher than a year ago, amounting to EUR 37.2m. Driven by industrial instruments, life science, and power, net sales amounted to EUR 54.7m (Evli: EUR 49.8m), reflecting y/y growth of 24%. EBIT improved y/y and amounted to EUR 11.5 (Evli: EUR 10.8m), reflecting an EBIT margin of 21%.
• Weather & Environment (W&E): W&E’s quarter was solid with its orders received amounting to EUR 75.7m and order book accounting to 145.6m, reflecting y/y growth of 4%. Net sales increased by 1% (constant currencies -3%) y/y to EUR 65.9m (Evli: EUR 68.3m). Growth was good in aviation while road weather and renewable energy were flat. With a softer gross margin and increased fixed costs, W&E’s EBIT fell below zero to EUR -1.1m (Evli: EUR 2.2m), implying an EBIT margin of -1.6%.
• 2022 guidance intact: expecting net sales between EUR 465-495m and EBIT between EUR 55-70m.
• Market outlook: IM’s markets are expected to continue their growth while W&E’s markets are estimated to be rather stable (renewable energy is expected to grow).

Open report

• Q2 revenue declined by 16.5% y/y and amounted to EUR 29.6m vs our EUR 38.0m estimate. Project revenue was EUR 12.7m, compared to our EUR 23.0m estimate, while services revenue was EUR 16.9m vs our EUR 15.0m estimate.
• EBIT was EUR -15.1m vs our EUR -10.7m estimate. The result was burdened not only by the write-offs related to Russian projects but inefficiencies due to the reorganization of work. Cost inflation remained a significant profitability headwind.
• Order intake came in at EUR 40m, compared to our EUR 30m estimate. Project orders were EUR 21m vs our EUR 15m estimate, while services orders amounted to EUR 19m vs our EUR 15m estimate. There were no single large orders, however modernization orders were at a high level and included a significant EUR 10m Latvian order.
• Order book was EUR 104m at the end of Q2, including EUR 16m in Russian orders.

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• Net sales in Q2 were EUR 73.1m (EUR 70.9m in Q2/21), in line with our and consensus estimates (EUR 74.6m/74.7m Evli/Cons.). Sales grew 3.1% y/y.
• Adj. operating profit in Q2 amounted to EUR 2.9m (EUR 2.9m in Q2/21), in line with our and consensus estimates (EUR 3.0m/2.9m Evli/cons.), at a margin of 4.0%. 
• The increase in construction materials prices had a greater impact than in the comparison period in certain on-going projects and inflation increased indirect costs. COVID also had an impact primarily through increased sick leaves.
• EPS in Q2 amounted to EUR 0.28 (EUR -0.09 in Q2/21), in line with our and consensus estimates (EUR -0.28/0.27 Evli/cons.).
• The order backlog in Q2 was EUR 240.8m (EUR 236.2m in Q2/21), up by 1.9% y/y. Order intake was EUR 98.7m in Q2 (Q2/21: EUR 98.5m).
• Free cash flow amounted to EUR 2.6m (Q2/21: EUR -1.4m).
• Guidance for 2022 (reiterated): Operating profit is expected to be between EUR 9-13m.  

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Top-line and bottom-line figures short of our estimates
Innofactor’s Q2 results fell short of our expectations. A weakened billing rate and challenges relating to individual project deliveries resulted in a slight y/y decline in revenue to EUR 16.9m (Evli EUR 17.7m). As a result, the operating profit also fell to EUR 0.7m (Evli EUR 1.4m) for a rather meager operating profit margin of 3.9%. The order backlog remained at a good level of EUR 77.2m, up 6.1% y/y. During the quarter, Innofactor acquired Invenco Ltd, a company specializing in data and analytics, with some 50 employees and EUR 6m in annual revenue.

Improvement needed during H2
Following the weaker first half of the year, on our revised estimates, we expect Innofactor to be able to beat its guidance with a slim margin essentially thanks to the acquisition of Invenco. EBITDA-margins should return to ~12% during H2, a level that under current circumstances could be seen as a normal level for Innofactor. Despite the implied one-off nature of the project delivery challenges we are slightly concerned for the operational delivery capabilities and the revenue trend in relation to the order backlog growth. Still, the potential is still quite solid and with the acquisition of Invenco and a normal profitability EPS would on our estimates grow 30% y/y in 2023.

BUY with a target price of EUR 1.25 (1.60)
With our revised estimates and continued operational uncertainty, as well as declines in peer multiples, we adjust our target to EUR 1.25 (EUR 1.60). Our TP values Innofactor at a slight discount to peers. Upside potential is provided by the profitability improvement potential. We retain our BUY-rating.

Open report

Absolute profitability topped the previous record

Exel’s top line grew 13.5% y/y to EUR 38.1m vs the EUR 36.8m/35.7m Evli/cons. estimates. Wind power customers developed soft relative to our estimate due to China and the local policies, but the shortfall was more than made up by Transportation where revenue grew by EUR 4.4m y/y to EUR 7.2m thanks to released pent up demand after the pandemic. The orders were attributable to old applications like train panels as well as a new aerospace application in North America, on the details of which Exel will elaborate later this year. Exel can already produce the application profitably even though it is only in the initial phases of its lifecycle. Q2 adj. EBIT reached EUR 3.1m, compared to the EUR 2.4m/2.2m Evli/cons. estimates. The 8.2% adj. EBIT margin was not bad, but Exel is still able to do better than that in the long-term assuming growth continues and the US unit keeps improving.

Progress is set to continue

The US unit has already improved a lot in recent quarters yet still has EBIT upside potential. This is also reflected by the EUR 37.0m order intake, which developed flat q/q but declined by 15% y/y as there were certain US Wind power orders last year which were later cancelled due to production challenges. The Q2 report confirmed Exel’s continued progress on its long-term track especially in that the company can find suitable high-volume customers and is not overly reliant on any one industry or application. The inflationary environment is not a major challenge given Exel’s niche position in the value chain. Exel left its guidance unchanged for now due to the well-known global uncertainties, however an upgrade seems likely in the months ahead.

Valuation is unchallenging as potential materializes

We make only very marginal updates to our estimates. We expect 10% growth for this year while we estimate a 7.4% adj. EBIT margin. The EUR 11m adj. EBIT translates to a valuation multiple of 10x, which would continue to decrease to 8x EV/EBIT on our FY ’23 estimates. We retain our EUR 8.5 TP and BUY rating.

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• Net sales in Q2 amounted to EUR 16.9m (EUR 17.5m in Q2/21), slightly below our estimates (Evli EUR 17.7m). Net sales in Q2 declined 2.0% y/y. Net sales increased in Norway and Denmark but decreased in Finland and Sweden due to a weakened invoicing ratio and challenges in individual project deliveries.
• EBITDA in Q2 was EUR 1.4m (EUR 2.1m in Q2/21, below our estimates (Evli EUR 2.1m), at a margin of 8.1%. EBITDA was positive in all operating countries except in Sweden.
• Operating profit in Q2 amounted to EUR 0.7m (EUR 1.3m in Q1/21, below our estimates (Evli EUR 1.4m), at a margin of 3.9%. 
• Order backlog at EUR 77.2m, up 6.1% y/y. According to Innofactor the sales performance was strong in Q2. New orders included for instance Senate properties (approx. EUR 2.2m), Danish pharmaceuticals company (approx. EUR 2.1m) and the State Treasury of Finland (approx. EUR 5.5m).
• In June, Innofactor acquired Invenco Ltd, a company specializing in data and analytics, with some 50 employees and EUR 6m revenue.
• Guidance for 2022 (reiterated): Innofactor’s net sales is expected to increase from 2021 (EUR 66.4m) and EBITDA is expected to increase from EUR 7.5m, which would have been EBITDA without the proceeds of EUR 2.6m from the sale of the Prime business. 

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• Revenue in Q2 was EUR 211.4m (EUR 218.0m in Q2/21), above our estimates and slightly below consensus estimates (EUR 191.7m/219.0m Evli/Cons.). Growth in Q2 amounted to -3% y/y.
• Operating profit in Q2 amounted to EUR 10.1m (EUR 6.3m in Q2/21), above our estimates and consensus estimates (EUR 4.1m/5.5m Evli/cons.), at a margin of 4.8%. Profitability in Q2 was supported by a higher profitability of the recognized income and a lower relative profitability is seen for the rest of the year. 
• Revenue in Construction in Q2 was EUR 206.8m vs. EUR 191.7m Evli. Operating profit in Q2 amounted to EUR 9.9m vs. EUR 6.1m Evli. 
• Revenue in Investments in Q2 was EUR 4.8m vs. EUR 1.1m Evli. Operating profit in Q2 amounted to EUR 1.4m vs. EUR -1.0m Evli. 
• Revenue in Other operations and elim. in Q2 was EUR -0.2m vs. EUR -1.1m Evli. Operating profit in Q2 amounted to EUR -1.2m vs. EUR -1.0m Evli. 
• Guidance for 2022 (specified): Revenue is estimated to be EUR 800-860m (prev. 800-950m) and the operative operating profit is estimated to be EUR 15-25m (prev. improve compared with 2021, when the operative operating profit amounted to EUR 5.3m). 

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• Exel Q2 revenue grew by 13.5% y/y to EUR 38.1m, compared to the EUR 36.8m/35.7m Evli/consensus estimates. Growth in North America was an important contribution, which stemmed from a new aerospace application in the Transportation customer industry.
• Wind power landed at EUR 6.5m vs our EUR 8.7m estimate, while Buildings and infrastructure was EUR 8.9m vs our EUR 9.2m estimate. Equipment and other industries amounted to EUR 5.9m, compared to our EUR 6.1m estimate.
• Adjusted EBIT was EUR 3.1m vs the EUR 2.4m/2.2m Evli/consensus estimates. Adjusted EBIT margin was therefore a very decent 8.2%. The US unit’s performance continued to improve. Exel has been able to adjust its sales prices to reflect higher raw materials, logistics and energy prices.
• Order intake amounted to EUR 37.0m in Q2, down by 14.9% y/y but flat q/q as there were large Wind power last year which were later cancelled.
• Exel guides revenue in 2022 to be at last year’s level while adjusted operating profit will increase compared to 2021 (unchanged).

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We make downward revisions to our estimates

Finnair’s EUR 550m Q2 revenue matched the EUR 549m/542m Evli/cons. estimates. Top line continued to rebound with higher passenger loads while cargo revenue was down q/q. Wet leases amounted to 6% of ASK and the figure continues to increase to above 10% as strong demand will extend over the winter and probably even up to next summer. The EUR -84.2m adj. EBIT missed the EUR -41.3m/-56.5m Evli/cons. estimates as jet fuel prices spiked during Q2. Ticket prices are to catch up with the resulting higher unit costs, but the big gap may not close for a while; yields picked up in June as demand matched capacity sufficiently to help revenue management efforts, but the pricing environment is to remain somewhat volatile. Finnair’s guidance for H2’22 implies further top line recovery, but we make some downward revisions to our ASK estimates. We expect Q3 EBIT to remain negative (EUR -9m vs our previous estimate of EUR 18m).

Roughly 10-15% of ASK could still be rerouted or sold

The EUR 60m in cuts should come in as planned and the new strategy, to be ready during the autumn, is to deliver more savings. Partnerships play an important role in the network strategy and the weight of previously marginal destinations, such as the US and India, will increase. Yet the new strategy also likely implies some aircraft sales. Leases can be included in the strategy, but we believe they are unlikely to amount to more than 10% of ASK. Hence some 10-15% of ASK needs to find new routes or be sold. Finnair has a strong record when it comes to flight and crew performance, and we expect the strategy will be able to secure profitability. FY ’23 is likely to see a meaningful positive EBIT, but there remains much uncertainty around the level. We now estimate the figure at EUR 77m (prev. EUR 116m).

Valuation appears tight relative to peer multiples

The competitive landscape remains stable; we see valuation tight against this backdrop when Finnair’s outlook is still subject to elevated uncertainty. Finnair trades around 26x and 12x EV/EBIT on our FY ’23-24 estimates; we find the levels high relative to peers. Our new TP is EUR 0.36 (0.43); our rating is SELL (HOLD).

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Expecting solid growth to continue
Vaisala’s Q1’22 included some positive seasonality and revenue was on a great level although Q1 has been historically the quietest quarter. We expect Q2’22 to contain less seasonality and revenue amount to EUR 118.1m, reflecting y/y growth of 7.9%. Revenue growth is driven by solid order book of W&E and strong sales development of IM as well as Vaisala’s delivery reliability during uncertain times. Our IM’s Q2 revenue estimate amounts to EUR 49.8m (+12.9% y/y) while W&E’s revenue estimate lands at EUR 68.3m (+4.4% y/y). So far, the company has been able to deliver all its orders without delays despite issues in its supply chain. We remain to wait for the news of the company’s order book development and management’s comments on the market environment as there have been some signs of slowdowns in the global industrial activity.

Some supply chain disruptions might affect margins
With the lack of crucial components, the company has sourced components from spot markets which have increased material costs during recent quarters. So far, robust topline growth and sales mix have offset the spot component impact on profitability and Q1 EBIT was surprisingly high. However, the company’s management pointed out that it’s increasingly difficult to purchase spot components. With the revenue growth, we expect Q2 EBIT to also improve y/y to EUR 12.5m but the weaker gross margin to restrict the EBIT margin development to 10.6%. We foresee some increases in the OPEX development y/y. The uncertainty lies in the gross margin development that in turn is associated with the level of spot component purchases and sales mix, and therefore our EBIT estimate include some uncertainty.

Estimates intact, valuation elevated ahead of Q2
We have made no changes to our estimates ahead of Q2. Like before, the company’s valuation remains quite elevated which is in our view justified, given Vaisala’s technology leadership and delivery reliability, but not providing a reason for a rating upgrade. We retain our HOLD-rating and TP of EUR 45.0.

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• Finnair Q2 revenue amounted to EUR 550.3m vs the EUR 548.7m/541.9m Evli/consensus estimates.
• Adjusted EBIT landed at EUR -84.2m, compared to the EUR -41.3m/-56.5m Evli/consensus estimates.
• Fuel costs were EUR 229m vs our EUR 175m estimate. Staff costs were EUR 114m, compared to our EUR 108m estimate. All other OPEX+D&A amounted to EUR 329m, compared to our EUR 355m estimate.
• Cost per Available Seat Kilometer was 8.09 eurocents vs our estimate of 7.52 eurocents.
• Finnair expects to operate an average Q3’22 capacity of some 70%, in terms of ASK, relative to the corresponding period in 2019. Capacity in Q4 will be similar or slightly higher than in Q3. (We find these would imply levels slightly below our estimates for ASK). Leases would bring the total capacity deployed to more than 80% in Q3 and some 80-85% in Q4. The 2022 comparable operating result will remain significantly negative. Finnair is preparing a new strategy and aims to complete the work during the autumn of 2022.

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Profitability is set to improve in H2

Raute’s Q2 bottom line will be burdened by big one-offs, including EUR 8-9m in write-downs related to Russian projects and receivables as well as some EUR 1m in restructuring costs such as severance. We thus revise our Q2 EBIT estimate down to EUR -10.7m (prev. EUR -1.4m). H1 results would have been poor even without such items due to the inflation which affects already signed orders. Raute expects profitability to improve in H2, which we do not find a big surprise. Raute is also finding ways to improve margins and lower costs; results should already materialize this year and be even better visible in 2023 especially if Western demand continues to develop favorably.

Western orders continue to pick up after slow years

Raute’s focus tilts to West, especially after the Russian orders have been delivered. North American orders came in at a high level of EUR 15m in Q1, but the level may not extrapolate that well even in a more favorable economic backdrop let alone in a souring one. We still expect the American business continues to pick up as the market was cool even before the pandemic, however we trim our estimates for new orders. Similar logic applies to Europe as the local market softened considerably towards 2019 but showed marked increases in orders last year, including a large Baltic project. Additional large European orders could improve outlook, but it’s difficult to estimate the materialization and timing of such projects especially now that uncertainty tends to undermine plans for larger investments. Our FY ’22 revenue estimate is intact at EUR 146m, but we cut our FY ’23 estimate to EUR 141m (prev. EUR 152m). We cut our FY ’23 EBIT estimate to EUR 4.8m (prev. EUR 6.2m).

Valuation not very challenging, but outlook a bit unclear

In our view Raute retains its position as the global leader within the niche of plywood and LVL machinery, particularly at the upper end of the market. The current valuation of 8x EV/EBIT, on our FY ’23 estimates, is not all too challenging, however there’s still a lot of uncertainty around the next few years’ profitability levels. We revise our TP to EUR 11 (14); our rating is HOLD.

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We believe EBIT could turn positive already in Q3’22

Q2 RPK topped our estimate by 12% thanks to high passenger loads, especially in June, as Europe was in line while Asian and North Atlantic flows were above our estimates. The overall Q2 RPK figure was roughly half of the level seen in 2019; Finnair’s European Q2 flows were already 70% of the corresponding 2019 figures, which reflects the fact that short-haul routes have rebounded faster than long-haul ones. Many airports have been strained under the traffic and Finnair cannot have dodged the challenge although the impact may have been less pronounced in its case. Finnair expected Q2 EBIT to land around the same level seen in Q4’21 (EUR -65m); we previously estimated the figure at EUR -80m but revise our estimate to EUR -41m due to the busier-than-expected early summer season. Finnair appears poised to reach profitability in the coming quarters, despite the Russian airspace closure, as Western routes continue to rebound and high travel demand helps secure good prices for wet leases.

Expect to hear more on shoring up long-term potential

The Russian closure is likely to limit Finnair’s long-term potential to some extent, however Finnair is yet to announce any sales of aircraft in response. It would therefore be interesting to get some further color on where Finnair sees itself standing now with respect to the already announced leases and potential additional capacity reduction measures. Finnair was quick to identify further EUR 60m in permanent cost savings, and there were hints the target could still be upped a bit. The company has also recently expanded its Stockholm Arlanda presence and may be able to pursue more growth from there.

Valuation reflects the improving environment

Jet fuel prices peaked in June and are already down by some 20% from those highs but the current levels remain elevated by historical standards. We have revised our EBIT estimates slightly upwards, but airline valuations have developed soft over the summer weeks and are now trading about 12x FY ’23 EV/EBIT. We don’t thus see upside on the 13-18x EV/EBIT multiples (on our FY ’23-24 estimates). We retain our EUR 0.43 TP and HOLD rating.

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Market continued challenging
Verkkokauppa.com’s topline faced an expected decline y/y, and with lower volumes, increased costs, and softer gross margin EBIT fell negative. Group revenue decreased by 3.7% y/y to EUR 125.7m driven by soft development of the consumer segment with the record low consumer trust and reduced consumer purchasing power. B2B segment and evolving product categories brought light with their y/y sales growth of 12.6% and 4.8% respectively. Q2 inventory was significantly above the level that of the comparison period and hence logistics costs faced a notable increase y/y which with a help of a softer gross margin resulted in an EBIT of EUR -0.9m (adj. EUR -0.2m), implying an EBIT margin of -0.7% (adj. -0.2%). Q2 EPS amounted to EUR -0.02.

Guidance was revised downwards
The company lowered its guidance for FY’22, now expecting revenue between EUR 530-570m (prev. 530-590m) and an EBIT of EUR 8-14m (prev. 12-19m). The downgrade of the upper bound of the sales guidance was a result of weaker outlook for the consumer segment while EBIT guidance was decreased due to lower expected sales volumes and increased price pressures. In addition to rising price competition, a high level of inventory forces the company to either lower product margins to increase the inventory turnover or store products over a season both potentially resulting in weaker profitability.

HOLD with a target price of EUR 3.7 (4.3)
In the light of guidance revision and Q2 result, we adjusted our estimates downwards. We now expect 2022 revenue to amount to EUR 556.0m and adjusted EBIT to land at EUR 7.9m (1.4% margin). 2022 result will be record soft; hence, we value the company with 23E multiples. With the company trading above its peers, we retain our HOLD-rating and adjust the TP to EUR 3.7 (4.3).

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• Group result: Q2 net sales decreased by 3.7% y/y to EUR 125.7m (EUR 123.7/122.9m Evli/cons.) driven by soft development of consumer and export segments. Price competition increased, resulting in a softer gross margin. Through lower net sales, increased fixed costs, and softer gross margin, the company’s EBIT fell below that of the comparison period to EUR -0.9m (EUR 2.4/2.1m Evli/cons.) implying an EBIT margin of -0.7% (Q1’21: 3.9%). EPS amounted to EUR -0.02 (EUR 0.03/0.03 Evli/cons.).
• Online sales: weaker sales development was seen through all sales channels and online sales represented 63% (Q1’21: 61%) of total sales.
• Category sales split: core categories represented 82% of total sales while evolving categories saw a y/y increase of 5% representing 18% of total sales.
• Consumer segment: The main driver for the soft development of the consumer segment was weak demand in core categories and the delayed summer season. Meanwhile, the sales of evolving categories increased by 4.8% y/y. The segment represented 68% of total sales (Q2’21: 72%).
• B2B segment continued its trend of strong development and corporate sales grew by 12.6% y/y. B2B segment represented 26% of total group sales (Q2’21: 22%).
• Export segment: with the withdrawal of Russian markets, export sales declined y/y and represented 6% of total sales
• FY’22 guidance lowered: last night the company lowered its FY’22 guidance, now expecting revenue to land between EUR 530-570m (prev. 530-590m) and EBIT to amount to EUR 8-14m (prev. 12-19m). According to the new guidance, the company’s topline will face a y/y decrease of 1-8% while EBIT is expected to clearly decline, by 31-61%.

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Late start of summer season has delayed sales somewhat
In our view, the demand for durable goods in Finland hasn’t taken notable positive steps ahead and hence we expect the company’s Q2 result to be soft. Market estimates imply the Finnish consumer electronics market not to see growth in 2022 which partly supports our Verkkokauppa.com expectations. In addition, the summer started relatively late in Finland which has in our view had a negative impact on Verkkokauppa.com’s sales from April to June.

Estimates intact, H2 defines full-year performance
Meanwhile, we expect the B2B segment to continue its ongoing trend with double-digit growth in Q2, on our estimates, the consumer segment sees a decline y/y. In our view, the trend of the consumer demand for H2 can be observed during August-September at the earliest, after the summer holidays are over, which eventually defines the company's full-year performance. Consequently, we expect Verkkokauppa.com’s revenue to decline also in Q3 while our Q4 estimates include some optimistic y/y growth. In Q2, we expect topline to decrease by ~5% y/y to EUR 123.7m, driven by low demand for consumer electronics and the late start of the summer in Finland. Our view is that the evolving categories might also have performed somewhat softer due to delayed season sales (grills and bicycles etc.). Due to lower revenue, softer gross margin, and increased fixed costs we expect EBIT to fall significantly to EUR 2.4m, implying an EBIT margin of 2%.

HOLD with a target price of EUR 4.3
The company’s 22E valuation is quite elevated compared to peers which is mostly explained by the company’s poor performance in 2022. However, on our 2023 estimates, the company’s EV/EBIT multiple falls below its peers with Verkkokauppa.com’s expected profitability improvement. We retain our HOLD-rating and TP of EUR 4.3 ahead of the Q2 result.

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External factors still restricting DT’s full potential
MBU performed well during the whole pandemic time while decreased demand for aviation solutions caused a significant decline in SBU’s activity. Industrial clients started investments early during the pandemic and IBU has enjoyed a solid revenue growth since. The recovery of SBU has started but the revenue is still significantly lacking from the levels of 2019. Moreover, COVID-19 lockdowns in China have further restricted the availability of critical components, forcing DT and its clients to postpone their deliveries. Even though the lockdowns in China would ease, the “normal” component shortage is expected to continue.

R&D pipeline loaded with opportunities
DT initiated its R&D program in early 2022 to lower its exposure to the component shortage which eventually enables faster lead times and higher revenue growth. The company aims to renew its products so that the critical components with low availability can be replaced by the components with better availability. DT’s R&D pipeline provides a potential for future development as the usage of data-emphasized imaging increases in all its market segments. Furthermore, investments in multi-energy technology provide notable future potential when ME solutions commercialize.

HOLD with a target price of EUR 20.0
Supply chain issues and increasing cost inflation as well as geopolitical tenses have forced us to take a more conservative stance. However, we believe in DT’s long-term story given its growth potential and developing technology and thus we retain our HOLD-rating with a TP of EUR 20.0. Future earnings growth supports the stock’s upward development, but we see DT’s current valuation compared to its peers somewhat elevated, not providing a suitable moment for increasing the position in DT.

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Adj. EBIT will top the EUR 42.4m figure seen previous year

Aspo’s upgrade didn’t come as a big surprise since the guidance appeared to be on the cautious side after strong Q1 results, however the update materialized at least a few months before we would have expected. In our view there have been no major news regarding ESL’s and Telko’s development since the Q1 report, but the dry cargo shipping business is still likely to see additional improvement from last year despite high uncertainty around macroeconomic trends. Telko’s Q1 results happened to benefit from the war’s effects as high plastics and chemicals prices helped adj. EBIT margin to 11.3%, likely an unsustainable level in the long run as high costs already had some impact on customers’ operations in Q1. Short-term profitability outlook remains favorable for ESL and Telko as the former is set to near EUR 30m EBIT while the latter continues to operate in an inflationary environment in the short and medium term.

M&A will add on top of Western organic opportunities

We estimate Aspo to reach EUR 44m in adj. EBIT this year (prev. EUR 34m). We believe Telko will see some softening in margins in the medium term and hence we wouldn’t expect improvement in EBIT for next year. The impending exit from Russia and Belarus limits overall organic growth rate, although Western markets should be able to make up some of the lost volumes. Telko also continues to look for M&A targets, while Leipurin just announced a major acquisition in Sweden. The target, a bakery distributor called Kobia, seems a great fit for Leipurin and is in line with Aspo’s Western M&A aims. The EUR 50m business isn’t that big in the Aspo context but is a significant move for Leipurin and profitable with a 3% EBIT margin. We are yet to include the acquisition in our estimates, but it should close in a few months. In our view the acquisition underlines Aspo’s commitment to Leipurin as M&A focus has often seemed to be around Telko.

Valuation is undemanding in the light of EUR 40m EBIT

Aspo’s EBIT is likely to remain around EUR 40m in the coming years. It may be hard to significantly improve from that level considering the already favorable market outlooks, but we view valuation undemanding as our SOTP suggests equity value closer to EUR 10 per share. We retain our EUR 8.5 TP and BUY rating.

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Building up production volumes at Pampalo
Endomines has seen continued two-fold progress during H1 so far, with ramp-up of operations at Pampalo progressing quite as planned while the mining operations at the Friday mine appear to be halted for a prolonged period of time. At Pampalo, Endomines produced 1259oz of gold during Q1. Focus has been on achieving a state of steady gold production at the processing plant. Endomines also announced plans to open the East open pit at Pampalo, which according to the company would increase gold production volumes with 10-20%. Operations at the open pit are expected to continue for approx. two years. At Friday, Endomines has carried out an underground diamond drilling campaign, with promising results. Further drilling is however still required and will be considered in late 2022.

Investigating potential in Finland amid macro uncertainty
Our estimates for Friday now assume production to be restarted during H1/2023 (earlier assumption mid-2022). The company noted that it is investigating partnership options, which could be beneficial given the company’s current lack of cash flows and continued need for additional financing. Production ramp-up at Pampalo and the assumed start-up of the East open pit this year provides some additional leeway but further financing will in our view be needed to further increase production. Endomines has also investigated possibilities to develop known deposits within the Karelian Gold Line. Gold is still enjoying rather favourable price levels, but precious metals have as safe haven assets been under pressure due to a stronger dollar and anticipated interest rate hikes. Any gold price deterioration would in our view clearly limit the economic feasibility of the other assets in Finland.

HOLD with a target price of SEK 2.2 (2.3)
With estimates revisions both operatively and due to completed and anticipated financing arrangements along with gold price uncertainty we adjust our TP to SEK 2.2 (2.3), HOLD-rating intact.

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Last steps of balance sheet strengthening program
SRV initiated a program to strengthen its balance sheet in conjunction with the Q1 results, seeking to increase equity by around EUR 100m and reduce IB net-debt by the same amount, due to the impact of the EUR 141.2m Q1 write-downs on its holdings in Russia and in Fennovoima on SRV’s equity and gearing. SRV is now approaching the final stages of the program to reorganize and strengthen its balance sheet. SRV resolved on a rights issue of up to approximately EUR 34.8m to existing shareholders on May 31st, with the subscription period running from 7.6.-21.6.2022 at a subscription price of EUR 0.10 per share offered.

Planned actions seen to increase equity ratio above 35%
Based on the company’s rights issue presentation, held on June 8th, we have adjusted our estimates assuming that shares are subscribed for up to maximum amount offered in both the rights issue and directed issue to hybrid note holders. At completion, this would increase the number of shares from approx. 263m to 670m. We have further adjusted our balance sheet estimates for the outcome of the tender offer and conversion regarding its senior unsecured notes. We have adjusted our operative estimates for the change in financial expenses, which according to SRV are expected to decrease by EUR 6m annually. After the transactions SRV’s equity ratio should rise to over 35% and the company should be close to being net-debt free (excluding the impact of IFRS 16).

HOLD-rating with a target price of EUR 0.18 (0.35)
On our revised estimates and the release of subscription rights we lower our TP to EUR 0.18 (0.35) and retain our HOLD-rating. Valuation is currently quite in line with peers, with 2022e EV/EBITDA, assuming full subscription, at 7.3x vs 7.6x for peers.

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Focus on the project execution
Nordec operates in the new non-residential construction market and designs, manufactures, and installs frame structures, envelopes and bridges. The company mainly uses steel in its structures but is able to complement its offering with other elements and materials. The company emphasizes its project management capabilities, which together with the wide service offering in our view provides a competitive advantage and serves the establishment of strong customer relationships.

Megatrends enable growth opportunities
Nordec operates in the traditional non-residential construction markets in Nordic and CEE countries. The market growth has been quite moderate but by focusing on growth pockets offered by current megatrends, the company gains access to more rapid growth opportunities. The company has delivered solutions for the battery value chain, logistics centers, and green transition investments in which the company in our view is well positioned to seek futher growth.

Implied equity value of EUR 71.7-85.0m
We have approached Nordec’s valuation mainly through peer group analysis. Nordec’s peers currently trade with 22-23E EV/EBITDA multiples of 6.4-6.2x and EV/EBIT multiples of 9.5-8.8x. In our view, Nordec’s valuation should near that of the peer group and should the company succeed in improving its profitability along with the investment program we see it justified that the company could be trading at or above its peers. Our implied equity value for Nordec lands between EUR 71.7-85.0m.

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Digital bank focused on own balance sheet lending
Fellow Bank is a digital bank providing lending and banking and financial services to individuals and SME’s and offering savers a return on their deposits. Through a recent merger, the company is shifting towards lending from its own balance sheet, having been established as an international marketplace lending platform. The new operating model and cheaper form of funding in our view offers additional growth potential and improves the company’s competitiveness, which opens up potential to target new customer sub-segments.

Seeking over 25% annual growth of loan portfolio
The company’s financial targets for 2022-2026 are: annual growth of more than 25% of the loan portfolio, a return on equity of more than 15% by the end of the target period and a capital adequacy ratio of at least 18% (T1). 2022 will be a tougher year financially due to exceptional costs relating to the merger and the build up the company’s loan book. We expect the company’s financials to turn on a clearly more favourable path in 2023 with the buildup of the loan book and further new growth. We expect profitability to pick-up during 2023-2024 with the growth and scalability of the operating model and expect the ROE to improve to 13.2% by 2024.

HOLD-rating with a target price of EUR 0.42
We initiate coverage of Fellow Bank with a target price of EUR 0.42 and HOLD-rating. Valuation is currently rather stretched when comparing with peers. Fellow Bank is however still in the early stages of its planned growth phase and the near-term potential for rapid growth in our view presents a justifiable reason to stay along for the early stages of the company’s growth story.

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Soft quarter underway
DT lowered its Q2 guidance and expects group revenue to decline y/y. The weaker-than-expected development of net sales is attributed to a product quality issue in the supply chain and the challenges for the company and its customers to purchase other critical components. Even though the product quality issue has been resolved, some MBU sales will be postponed to Q3 due to delays in the supply chain.

We lowered our estimates
Due to the issues mentioned above, we downgraded our 2022 estimates (especially MBU’s) and took a more cautious stand on our near-future expectations, despite the fact that the company is expecting to see double-digit growth in H2’22. DT noted also that the underlying demand remains strong, and, to our understanding, upcoming product updates are expected to reduce DT’s exposure to the component shortage starting from Q3. Driven by DT’s strong leverage of earnings and with net sales decreasing, our Q2’22E EBIT estimate faced quite hefty downgrade, declining ~20% from what we earlier expected. More on page 2.

HOLD with a target price of EUR 20.0 (22.5)
Driven by the decline of our 22E EBIT estimate and increased uncertainty, we have adjusted our TP to EUR 20.0 (22.5). Both peer group’s and DT’s valuations have been quite stable since our last update (28th April). DT is now trading with 22-23E EV/EBITDA multiples of ~16-13x and EV/EBIT multiples of ~20-15x. At this stage, we will accept a 22E EV/EBIT multiple of 20x as in 2023 DT’s valuation drops near its peer valuation with our new target price. We retain our HOLD-rating.

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Guidance for 2022 lowered
Solteq issued a profit warning, lowering its guidance for 2022 for both revenue and operating profit. According to the new guidance revenue in 2022 is expected to grow and operating profit to weaken, while the company previously expected revenue to grow clearly and operating profit to improve. The guidance downgrade is driven in particular by the Utilities business, where Solteq sees that increased investments and project delivery costs will weaken the profitability and reduce customer invoicing.

Scalability potential not materializing as expected
We have lowered our estimates for the on-going year, with a quite notable decrease in operating profit. We now expect 2022 revenue of EUR 75.0m (prev. EUR 77.0m), for an implied growth of 8.7%. Taking into account the more recent acquisitions, the estimated organic growth is heading towards lower single-digit figures. We have lowered our operating profit estimates by some 15% to EUR 6.6m. All the made revisions relate to our estimates for Solteq Software. The reasons for the guidance downgrade appear to point to near-term challenges, but we expect a spill-over effect on 2023 thus slowing down the expected scaling of Solteq Software and with the added uncertainty we have also lowered our 2023 operating profit estimate by some 15%. The overall narrative is still seemingly unchanged, only the expected scaling of Solteq Software appears delayed.

BUY with a target price of EUR 3.4 (5.0)
Following our estimates revisions we lower our target price to EUR 3.4 (5.0) and retain our BUY-rating. We currently expect profitability in 2023 to improve to 2021 levels, with notable improvement potential still present through Solteq Software. With the bumps in the road we now value Solteq close to the IT services peers, having previously justified a larger premium.

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• Solteq’s new guidance for 2022: Solteq Group’s revenue is expected to grow and profit to weaken.
• Previous guidance: revenue is expected to grow clearly and operating profit to improve.
• Solteq noted as reasons for the guidance downgrade the impact of higher-than-estimated investments in product development in Solteq’s Utilities business unit along with increased project delivery costs on profitability and reduced customer invoicing during the on-going financial year.
• Our estimates for 2022e revenue and operating profit have been EUR 77.0m and 7.7m respectively, implying a revenue growth of 11.6% and ~8% improvement in operating profit y/y. The new guidance implies single-digit growth and compared with our estimates an over 10% decline in operating profit in 2022e.
• The guidance downgrade is unfortunate for the near-term, but does not based on the reasons stated appear to give reason to assume that the long-term scalability drivers wouldn’t remain intact. 

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Project Personnel continues to perform this year

The Norwegian oil and gas sector continues to stand in a favorable spot, and Project Personnel delivered solid figures already in FY ’21; performance continued to improve towards the end of the year with no sign of inflation affecting the results. Q1’22 results demonstrated no sign of weakness. Meanwhile there was some softness in Consulting due to a high comparison period, however the segment has always been a stable performer and we expect earnings growth again next year. Project Personnel may be in a particularly favorable spot right now, but Consulting has arguably more long-term potential. This would require successful execution in terms of new customers; Dovre may also find M&A targets to help growth. The new customers will probably not be too far from Consulting’s core Norwegian public sector civil and infrastructure projects, yet the segment could be looking to expand in Finland as well.

Consulting and Renewable Energy have more potential

Inflation does not seem to bother Project Personnel or Consulting, and even Renewable Energy appears to have been able to anticipate certain challenges well enough. We estimate EUR 201m revenue for this year and see EBIT at EUR 8.4m. The 4.2% EBIT margin would already be very decent, and translate to a high double-digit ROI, but we estimate Dovre’s profitability has more long-term potential as the results for Consulting and Renewable Energy are likely to remain a bit modest this year. The outlook for Dovre’s key client sectors is robust; we view our 5% organic CAGR estimates moderate. We also see Dovre’s EBIT margin poised to climb towards 5% in the coming years even when we estimate a conservative 4% EBIT margin for Project Personnel.

Valuation is not demanding

We regard SOTP the most appropriate way to value Dovre with its three distinct segments. We see the fair range around EUR 0.70-0.75 per share based on the FY ’21-22 peer multiples. We tilt towards the lower end of the range as valuations have been under pressure lately. Our TP is EUR 0.70; our rating is BUY.

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Strong start for the year
Marimekko’s Q1 performance was clearly better than we had anticipated. Topline saw an increase of 24% y/y driven by all markets. A favorable trend of retail and wholesale sales in Finland and good development of int’l sales boosted the revenue to high double-digit growth. The largest segment, Marimekko’s home market Finland grew by 27% y/y while int’l sales increased by 20% y/y. Q1 group topline amounted to EUR 36.0m (Evli: 30.4m). Gross margin (63%) was negatively affected by increased logistics costs and higher discounts. Driven by softer gross margin and increased fixed costs, Q1 adj. EBIT margin (18.4%) was below that of the comparison period, adj. EBIT amounting to EUR 6.6m (Evli: 3.9m). EPS totaled EUR 0.12 (Evli: EUR 0.08).

Guidance intact, we made estimate revisions
Marimekko reiterated its 2022 guidance: revenue above the 2021 level and adj. EBIT margin between 17-20%. The company also expects the relative growth pace to slow down in H2, which stems from the strong comparison figures as well as lowered consumer confidence to which Marimekko was quite immune in Q1, in our understanding. We raised our 22E EBIT margin estimate near the upper bound of the guidance. Driven by a strong start of the year, we expect the company to face low double-digit growth in 2022 by full-year net sales amounting to EUR 167.7m and adj. EBIT totaling EUR 32.5m (more on report page 2).

BUY with a target price of EUR 14.5 (12.8)
The company’s share price has fallen from the 2021 highs by some ~50%. Meanwhile, Marimekko’s peers have also seen a decline in their valuation. Given the strong start of 2022 and by accepting a 22E EV/EBIT multiple of 18x, we upgrade our recommendation to BUY (HOLD) and adjust TP to EUR 14.5 (12.8).

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•    Q1 group result: topline increased by 24% y/y to EUR 36.0m (EUR 30.4m/32.4m Evli/cons.) beating our and consensus estimates. Net sales growth was driven by solid development of wholesale and retail sales in Finland as well as good performance of int’l sales. Adj. EBIT improved to EUR 6.6m (EUR 3.9m/3.9m Evli/cons.), being 18.4% of revenue. Weakened relative profitability was driven by increased material and fixed costs. On the other hand, EBIT was supported by topline growth and lower D&A. EPS amounted to EUR 0.12 (EUR 0.08/0.08 Evli/cons.).
•    Finland: net sales grew by 27% y/y to EUR 18.5m (Evli: EUR 15.2m). The growth was driven by both retail (+18% y/y) and wholesale sales (+41% y/y).
•    Int’l: revenue saw an increase of 20% y/y, amounting to EUR 17.5m (Evli: EUR 15.2m). Good sales development was driven by all market segments. Topline grew strongly in the EMEA region (+34% y/y), North America (+26% y/y), and Scandinavia (+23% y/y) while the growth in the APAC region was more moderate with an increase of 10% y/y.
•    2022 guidance reiterated: Topline is expected to be above that of the comparison period (2021: EUR 152.2m) and adj. EBIT margin to be between 17-20% (2021: 20.5%).
•    Outlook: although consumer confidence has been in a trend of decline, it seems that Marimekko has enjoyed still solid demand in Q1. The company expects retail, license, and wholesale sales to grow in 2022. In percentage terms, Marimekko estimates the net sales growth to be stronger at the beginning of 2022 than in H2.

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New collaborations incoming
In early 2022, Marimekko announced of few collaborations with global lifestyle brands to enhance its brand awareness in its growing markets. Adidas collaboration got a sequel with new spring/summer collection that dropped during April 2022. In addition, Marimekko collaborates with a luxury brand Mansur Gavriel. The bag collection will be available starting from June 2022. Moreover, Marimekko announced its collaboration with global furniture and décor company IKEA. The collection will be released in spring 2023. Collaborations bring Marimekko highly scalable licensing revenue but, more importantly, by cooperating with popular lifestyle companies Marimekko’s brand awareness improves abroad significantly.

Consumer trust in decline in Marimekko’s main markets
Driven by increased inflation and interest rate pressures as well as geopolitical tenses due to Russia’s attack on Ukraine, consumer trust has been in a trend of decline in the western markets. Also, in Marimekko’s second-largest market, Japan, the inflation has picked up driven by material and energy costs. We expect the declined consumer activity to have a slight impact on Marimekko’s Q1 sales development and thus we have revised our quite optimistic near-term estimates. From what we earlier expected, we have downgraded our 22E topline estimate by 2% while our 22E EBIT estimate faced a decrease of 5% (see report page 2).

HOLD with a target price of EUR 12.8 (15.8)
In recent months, Marimekko’s valuation has melted alongside its peer group’s valuation. With our revised estimates, the company trades with 22E EV/EBIT and P/E multiples of 15x and 19x respectively. Considering our acceptable 22E EV/EBIT and P/E multiples of 17x and 21x respectively, we see slight upside potential in Marimekko’s stock price but, at the same time, remind about the uncertainty concerning the demand for Marimekko’s products. We retain our HOLD rating and adjust TP to EUR 12.8 (15.8).

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Double-digit organic growth in Q1
Etteplan reported overall solid Q1 results and clearly better than we had anticipated. Although increased sick-leaves and lockdowns affected operations, revenue still grew 23% y/y and near 15% organically to EUR 89.6m (EUR 81.2m/87.7m Evli/cons.). Profitability was also at good levels, with EBIT of EUR 7.6m (EUR 6.5m/6.9m Evli/cons.), at a margin of 8.5%. On service area levels, compared with our estimates, revenue and profitability was better across the board. Profitability in Engineering Solutions in particular was solid following as a result of excellent operational efficiency levels.

Market outlook still appears to be fairly favourable
Comments regarding the demand situation and market uncertainties were all in all somewhat upbeat, and potential near-term demand declines in some sectors seem to be offset by increased demand in others. The direct impacts of the war in Ukraine have as expected so far been limited. COVID-19 still poses issues due to sick-leaves and lockdowns in China. Etteplan kept its guidance intact, expecting revenue of EUR 340-370m and EBIT of EUR 28-32m. Following the solid Q1 figures and some slight tweaks to the following quarters our estimates are now quite in line with the mid-range of the guidance. We take a rather neutral approach given the current uncertainties, still seeing good organic growth but at a slightly lower pace compared with Q1.

HOLD with a target price of EUR 17.0 (16.5)
Etteplan currently quite justifiably trades above peers given the good growth and profitability. More optimal market conditions could well justify >20x P/E levels but with the current uncertainties and ~20% y/y deterioration in peer median NTM P/E current levels appear quite fair. We adjust our TP to EUR 17.0 (16.5) due to estimates revisions, HOLD-rating intact.

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Growth helped profitability top estimates

Q1 revenue grew 17% y/y to EUR 163m vs the EUR 157m/157m Evli/cons. estimates. Volume growth was even higher than the company expected, 7% on an organic basis. The beat was due to corporate customers, where Pohjola Hospital added EUR 9.4m, but also thanks to public sector, including Virta, where higher outsourcing pricing helped. Outsourcing profitability improved by EUR 1.5m y/y. High levels of sick leaves were a drag, and Covid-19 services are no more that profitable, but the volumes helped the EUR 5.9m adj. EBIT top the EUR 3.3m/3.5m Evli/cons. estimates. Pohjola Hospital’s integration has so far proceeded better than expected, but Pihlajalinna nevertheless retains its guidance for now as there remain a few uncertain factors.

Integration progress is ahead of plan in some ways

Pohjola Hospital posted positive results already two months after the acquisition, although not every unit is yet profitable. There’s still some uncertainty around how quickly the integrated whole can be turned to driving higher volumes, but positive development is likely to continue in H2. In this sense the guidance is on the conservative side, but it makes certain allowances for issues which may affect results during the following quarters. Sick leaves were high in Q1 due to infections, and this experience informs some caution. Certain negotiations related to Pohjola Hospital are yet to be completed, as is the case for outsourcing restructurings. Current labor market issues raise uncertainty, and in the case of Pihlajalinna the potential implications follow with a lag. Pihlajalinna is also scaling up capacity in advance to better meet future demand.

Guidance remains moderate for now

Our estimates for rest of the year are moderate, in line with the guidance, and there’s a good chance for an upgrade during or after Q3. Pihlajalinna’s margins have a lot of catching up to do with peers, but the Q1 results and comments on outlook suggest the company has established a firm footing. The 15.5x EV/EBIT valuation on our FY ’22 estimate isn’t high in the sector context, and we estimate the discount to grow and the multiple to drop to below 11x next year. We retain our EUR 14 TP and BUY rating.

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• Net sales in Q1 were EUR 89.6m (EUR 73.0m in Q1/21), above our estimates and slightly above consensus estimates (EUR 81.2m/87.7m Evli/Cons.). Increased sickness-related absences affected Etteplan’s business, but growth was nonetheless strong, 23% y/y, of which 14.1% organic. 
• EBIT in Q1 amounted to EUR 7.6m (EUR 6.6m in Q1/21), above our estimates and consensus estimates (EUR 6.5m/6.9m Evli/cons.), at a margin of 8.5%.
• EPS in Q1 amounted to EUR 0.23 (EUR 0.21 in Q1/21), above our estimates and in line with consensus estimates (EUR 0.19/0.22 Evli/cons.).
• Net sales in Engineering Solutions in Q1 were EUR 46.7m vs. EUR 44.0m Evli. EBITA in Q1 amounted to EUR 4.9m vs. EUR 4.2m Evli. 
• Net sales in Software and Embedded Solutions in Q1 were EUR 24.6m vs. EUR 21.8m Evli. EBITA in Q1 amounted to EUR 2.3m vs. EUR 2.0m Evli. 
• Net sales in Technical Documentation Solutions in Q1 were EUR 18.1m vs. EUR 15.2m Evli. EBITA in Q1 amounted to EUR 1.8m vs. EUR 1.6m Evli. 
• Guidance for 2022 (reiterated): Revenue is estimated to be EUR 340-370m and the operating profit is estimated to be EUR 28-32m. In terms of market outlook, Etteplan expects the general demand situation to remain fairly good throughout 2022.

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Q1 results and guidance downgrade were minor negatives

Suominen’s EUR 110m Q1 top line landed close to the EUR 109m/115m Evli/cons. estimates. Revenue declined by 4% y/y as volumes decreased to an extent where higher sales prices could not help. Americas was a bit softer than we expected, while Europe compensated for the shortfall. The EUR 6.6m gross profit didn’t land that much below our EUR 7.1m estimate, but higher admin costs meant the EUR 3.3m EBITDA was below the EUR 4.8m/4.4m Evli/cons. estimates. Suominen revised its guidance down, but this wasn’t such a significant negative in the light of the current uncertain environment and Suominen’s P&L’s sensitivity to various factors. In our opinion Suominen’s profitability is set to improve from the current lows.

Q2 should already improve a bit q/q

Demand fluctuations remain in certain wiping product categories for now as high inventory levels continue to caution some US customers. Suominen’s response is to adjust its sales mix by repurposing manufacturing lines to better meet demand. Suominen has also been looking for new customers. There’s uncertainty around the overall improvement pace with regards to the whole supply chain, but we continue to expect revenue growth for this year. Increased energy costs (mostly electricity for Suominen) continue to weigh Q2 results to some extent, along with higher raw materials prices, but we see Q3 performance a lot improved. We trim our Q2 EBITDA estimate to EUR 7.5m (prev. EUR 9.7m). Our revised EBITDA estimate for this year stands at EUR 36.0m (prev. EUR 39.8m).

Valuation is by no means demanding

Suominen is valued around 5.5x EV/EBITDA and 12x EV/EBIT on our FY ’22 estimates. These are yet not particularly low multiples, but we continue to expect significant profitability improvement for H2. We now estimate 6.0% EBIT margin for next year (prev. 6.5%), and hence Suominen is valued about 4x EV/EBITDA and 6.5x EV/EBIT on our FY ’23 estimates. Our new TP is EUR 3.5 (4.0) as we retain our BUY rating.

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Q1 figures in fact gained from the turbulence

Aspo’s Q1 revenue was driven to EUR 160m, compared to the EUR 132m/136m Evli/cons. estimates, by Telko’s high EUR 76m top line. We had estimated EUR 58m, and the figure was lifted by the extraordinary inflationary environment created by the war. Telko’s markets’ normalization is now postponed. Telko’s adj. EBIT reached EUR 8.6m, and Aspo’s EUR 10.3m EBIT was clearly above the EUR 8.0m/7.6m Evli/cons. estimates while there were EUR -4.9m in items affecting comparability. ESL’s performance didn’t come as a big surprise as it was known the war will have little direct impact on the dry bulk business.

We reckon Telko’s long-term potential hasn’t diminished

There are many moving parts but Q1 was overall a lot better than was estimated as the environment lifted prices and for that part supported the two raw material distributors. The war thus caused a short-term boost for Telko and Leipurin, but downscaling creates uncertainty particularly around H2. Leipurin will exit Russia, Belarus and Kazakhstan, which account for almost EUR 30m in revenue. Telko is reviewing possibilities to exit Russia, and we understand some 30% of Telko revenue may be affected. The closure is thus significant, but we understand its impact on margins will be modest. Telko’s long-term 8% EBIT target should remain relevant. We see Telko’s FY ’23 revenue down 20% from Q1’22 LTM; uncertainty hangs around the figure for the next few quarters, but we believe it shouldn’t take Telko too long to again reach EUR 15m EBIT. Demand for ESL’s handysize vessels temporarily softens in Q2 as customers adjust to the Russian situation, but larger vessel demand could compensate for this.

In our opinion valuation neglects Telko’s potential

Our estimate revisions are relatively small on an annual level. There are still many questions around Telko’s performance going forward, but the Q1 results were encouraging and in our view possibility for a positive guidance revision has increased. We view an EBIT of about EUR 40m a relevant possibility again in the coming years, which would correspond with the roughly EUR 30m and EUR 15m long-term EBIT levels for ESL and Telko. Our new TP is EUR 8.5 (8.0), and our rating is now BUY (HOLD).

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Revenue in line, profitability fell particularly in Sweden

Eltel’s Q1 revenue was EUR 184m vs the EUR 185m/180m Evli/cons. estimates. Top line turned to growth in Q1, and there were no delays although some Polish projects may be affected going forward. Winter conditions and infections also had a negative effect on productivity, but fibre and 5G demand remained very strong in the Nordics. Power grid works in the Nordics are prospects. Operative EBITA was EUR -2.4m vs our EUR -0.2m estimate as inflation accelerated. Finnish and Norwegian profitability levels were like we expected, Denmark was a bit soft; the miss was mostly due to Sweden. Eltel removes its guidance for the year because of the inflation spike, however the company expects to receive compensation for higher costs already in Q2 in the Nordics, but Poland might take longer.

Potential remains, but uncertainty is high

Inflation is really hurting the Power business through fuel, steel, cable and concrete prices, and the war in Ukraine is also an issue as it might delay projects in Poland. Eltel works on the assumption inflation will persist for now and hence the company also pushed its long-term financial performance target date forward by two years. We cut our Q2 EBITA estimate to EUR 3.7m (prev. EUR 7.1m). We therefore estimate only marginal profitability improvement this year. We expect Eltel’s earnings improvement to continue next year as the company is likely to receive adequate compensation for higher costs. We also expect Sweden to be back to black later this year and note Eltel is implementing certain profitability investments in the country.

Valuation is overall fair relative to peers

Our EBITA estimate for the year is now EUR 15.1m vs EUR 22.2m before the report. We make basically no changes to our top line estimates and apply only a minor cut to our FY ’23 profitability estimates. Eltel is valued at a relatively high 18x EV/EBIT level on our FY ’22 estimates, but the level should decline relatively fast in the coming years as profitability lags most peers. The valuation is modest relative to long-term potential, but in our view this is fair. Our TP is now SEK 10 (15); we retain our HOLD rating.

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• Q1 revenue grew by 16.6% y/y to EUR 163.1m, compared to the EUR 156.6m/156.7m Evli/consensus estimates. Corporate customer revenue was EUR 49.3m vs the EUR 44.6m/44.6m Evli/consensus estimates, while private customers amounted to EUR 22.8m vs the EUR 22.6m/24.1m Evli/consensus estimates. Public sector customers were EUR 109.2m, compared to the EUR 107.8m/105.2m Evli/consensus estimates. Inorganic growth contributed EUR 15.9m while organic growth was EUR 7.3m, or 5.2%.
• Covid-19 services revenue amounted to EUR 8.1m.
• Adjusted EBITDA was EUR 16.5m vs the EUR 13.1m/12.1m Evli/consensus estimates, while adjusted EBIT landed at EUR 5.9m, compared to the EUR 3.3m/3.5m Evli/consensus estimates.
• Pihlajalinna guides revenue to increase substantially and adjusted EBITA to remain flat (unchanged).

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• Aspo Q1 revenue was EUR 160.4m vs the EUR 132.2m/135.6m Evli/consensus estimates.
• EBIT landed at EUR 10.3m, compared to the EUR 8.0m/7.6m Evli/consensus estimates. There were a total of EUR -4.9m in items affecting comparability, and Aspo’s adjusted EBIT amounted to EUR 15.0m.
• ESL’s revenue was EUR 56.8m vs our EUR 50.9m estimate, while EBIT was EUR 7.9m vs our EUR 7.5m estimate.
• Telko’s top line amounted to EUR 75.9m, compared to our EUR 58.1m estimate. EBIT was EUR 4.0m vs our EUR 1.8m estimate. There were a total of EUR -4.6m in items affecting comparability, and adjusted EBIT was EUR 8.6m. Telko’s Q2 performance should remain strong, but the situation for H2 is unclear.
• Leipurin revenue was EUR 27.7m, compared to our EUR 23.2m estimate, while EBIT came in at EUR -0.4m vs our EUR 0.1m estimate. Items affecting comparability amounted to EUR -1.1m, adjusted EBIT being EUR 0.7m.
• Other operations cost EUR 2.5m, compared to our EUR 1.4m estimate, including e.g. EUR 0.5m in extraordinary compensation to the former CEO.
• Aspo retains its guidance and expects FY ‘22 EBIT in the EUR 27-34m range.

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• Q1 revenue was EUR 110.3m, a decline of 4% y/y, compared to the EUR 109.0m/114.7m Evli/consensus estimates. Americas amounted to EUR 61.7m vs our EUR 64.0m estimate while Europe was EUR 48.5m, compared to our EUR 45.0m estimate.
• Gross profit was EUR 6.6m vs our EUR 7.1m estimate. Gross margin therefore amounted to 6.0%, compared to our 6.5% estimate.
• EBITDA landed at EUR 3.3m vs the EUR 4.8m/4.4m Evli/consensus estimates. EBIT was EUR -1.3m vs the EUR -0.2m/-0.6m Evli/consensus estimates.
• Suominen now guides EBITDA to decrease clearly this year. The war has intensified cost inflation. Customer inventory levels in the US have normalized to an extent, although somewhat slower than expected. Suominen expects demand to improve in H2.

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• Q1 revenue grew by 1% y/y and amounted to EUR 184.0m vs the EUR 185.4m/179.8m Evli/consensus estimates. Growth was strong in Sweden and Norway, while Finland declined and Denmark especially so partly because of slower than anticipated ramp up of new agreements. The demand for fibre and 5G overall remains high.
• EBIT landed at EUR -2.5m, compared to our EUR -0.3m estimate. Operative EBITA was EUR -2.4m vs our EUR -0.2m estimate. Inflation hit the results in all markets, especially in the form of higher fuel and asphalt prices. The Finnish and Polish power businesses also saw inflation in materials such as steel. Eltel is in dialogue with customers regarding compensation for the cost increases.
• Profitability in Finland remained sound, along with Norway, but the Q1 loss in Sweden deepened and Danish results also declined a lot.
• Eltel removes guidance as the war and increased inflation raise uncertainty. The previous guidance expected FY ’22 operative EBITA margin to increase.

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EUR 500m revenue and EUR 100m EBITDA by 2027

Enersense targets EUR 300m revenue for the current construction and EUR 100m for the current wind power business by 2027. The former would contribute EUR 30m EBITDA and the latter EUR 35m. The Megatuuli acquisition helps the company to have a say on the kinds of wind power projects that get developed. Proprietary renewables production is to be ramped up to EUR 100m revenue, or 600-700MW of mostly Finnish onshore wind power capacity, which requires some EUR 300m of equity-like capital (assuming 40% equity ratio, depending on the exact financing structure, which we assume could include e.g. hybrid instruments). The projects would be valued at some 20x EV/EBITDA (an IRR of around 5-10%). Enersense develops its offshore wind power platforms to tackle the pack ice challenges. The Baltic wind power market also has plenty of growth potential as there’s not yet much local capacity.

Wind power dominates, but other renewables also figure in

The Finnish wind power market is now the most important but not the only focus area. Enersense also has interest towards solar energy as the company views it an overlooked source in Finland. Within nuclear power Enersense is involved in France and the UK, besides Finland. The new European project of energy self-sufficiency in general greatly helps Enersense’s long-term outlook and includes such concrete prospects as the Baltic transmission network’s desynchronization from the Russian system. Another opportunity is found in Finland, where the EV stock is expected to grow at an above 20% CAGR during this decade. There’s always the potential for some additional M&A, but we believe the already identified renewable production pipeline will claim most of the focus during the years to come.

The transformation happens gradually over the years

We make no changes to our estimates for now, but it’s clear Enersense’s financial profile is going to change a lot over the coming years as the company begins to add its own renewable energy production. We retain our EUR 8 TP and HOLD rating.

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Cautious approach to Q1 due to increases in sick leaves
Etteplan reports Q1 results on May 5th. Our Q1 estimates remain more on the conservative side as a precaution given the increases in sick leaves seen in conjunction with the Q4 report, but with the good growth figures posted in Q4 there is certainly potential for faster growth. In terms of profitability, we expect a similar trend as during 2021, with the full-year EBIT-margins set to remain near the 9% mark. Our estimates for Q1 are unchanged ahead of the earnings report, with our net sales and EBIT estimates at EUR 81.2m (Q1/21: EUR 73.0m) and EUR 6.5m (Q1/21: EUR 6.6m) respectively.

Some potential indirect demand uncertainty
The guidance given for 2022 in the Q4 report was in our view quite solid, with revenue estimated to be between EUR 340-370m and EBIT to be between EUR 28-32m. The mid-range of the guidance according to our estimates would imply an organic growth of around 10% excluding potential new acquisitions. The situation in Ukraine has caused some additional demand uncertainty, although potential direct impacts should not be material, as Etteplan to our understanding does not have any significant business in the countries directly affected. Although we do not see any notable pressure on margins, we note that Etteplan proved its resilience and adaptability to changes in the demand environment during the pandemic. Our 2022 estimates remain unchanged, with our revenue and EBIT estimates at EUR 344.5m and 29.3m respectively.

HOLD with a target price of EUR 16.5 (17.5)
Although our estimates remain intact, we adjust our target price slightly to EUR 16.5 (17.5) in light of the added uncertainty factors. Our target price values Etteplan at approx. 19x 2022 P/E. We retain our HOLD-rating.

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We expect Q1 EBIT to have declined by EUR 3.4m y/y

Pihlajalinna’s organic growth was healthy throughout last year, including in Q4, as corporate and private customer demand bounced back from the pandemic lows. We estimate FY ‘22 organic growth to slow down to roughly half of the 13.5% rate seen last year. Q4 profitability saw a temporary setback as specialized care costs increased. We expect Pihlajalinna to receive compensation for these complete outsourcing costs later this year, but the negative effect was some EUR 2m in Q4 and we expect it to have been similarly significant in Q1 as well. Pohjola Hospital’s FY ’21 EBIT was ca. EUR -7m and hence Q1 EBIT will have to bear another meaningful burden. The Q1 figures will not fully reflect the acquisition as it was completed only by the beginning of February. We continue to expect EUR 156.6m revenue and EUR 3.3m EBIT for Q1.

Pohjola Hospital should involve no big surprises

Pihlajalinna previously indicated Covid-19 services revenue to decline this year. There was already some fading in Q4, and we expect this to have been the case also in Q1 even when the Finnish virus situation was by some measures the worst during the pandemic. We expect the Pohjola Hospital integration to have proceeded very much according to plan so far. Losses will still be there in Q2 but H2 could already show positive results. The EUR 5m in projected cost synergies are significant and the acquisition helps gain insurance customer volumes, which is an attractive segment.

Earnings and multiple expansion potential remain as before

Pihlajalinna’s peer multiples have remained largely unchanged in the past few months. The big picture on Pihlajalinna’s valuation is therefore intact: Pihlajalinna’s profitability now lags the (mostly) larger peers’ but should begin to catch up soon. Meanwhile the multiples for FY ’23-24 are some 30% below those of peers. We retain our EUR 14 TP and BUY rating.

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Growth softness in Q1 due to long winter
Consti’s Q1 results were fairly decent compared with our estimates. Revenue development was slow due to the longer winter, with y/y growth of 0.9% to EUR 59.8m (EUR 63.3m/64.4m Evli/cons.). Profitability was still at decent levels for the seasonally slower quarter, with EBIT at EUR 0.4m (EUR 0.0m/0.4m Evli/cons.). The increase in construction materials prices had a somewhat higher impact than in the comparison period. The order backlog grew 4.4% y/y on new orders of EUR 37.6m (Q1/21: 69.8m). Consti kept its guidance intact, expecting the operating profit in 2022 to be between EUR 9-13m.

2022 estimates still largely intact
We have only minor adjustments to our 2022 estimates, having slightly lowered our growth and profitability estimates for the rest of the year, while our full year EBIT estimate is slightly up due to the earnings beat in Q1. Our 2022 estimates for revenue and adj. EBIT are now at EUR 304.5m (2021: 288.8m) and 10.7m (2021: EUR 9.5m). The market continues to be affected to some degree by construction material availability and prices, with the crisis in Ukraine having further affected the situation and created short-term uncertainty relating to new projects in the negotiation phase, but overall still does not appear to have deteriorated materially and the long-term demand drivers for the renovation market provide continued support.

BUY with a target price of EUR 12.0 (13.0)
The uncertainty relating to demand and construction material prices and availability is currently at elevated levels and has understandably led to lower valuation multiples. Consti is in our view still less prone to the shocks compared with primarily new construction focused companies. Consti currently trades below peers, which given the aforementioned appears unjustified. We adjust our TP to EUR 12.0 (13.0) and retain our BUY-rating.

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Strong headline EBITDA, but mixed results underneath

Enersense’s revenue was up by 1% y/y to EUR 53.8m, compared to our EUR 54.2m estimate. Smart Industry’s figures declined due to the Staff Leasing sale as well as the lower than estimated Olkiluoto nuclear power plant volumes. The Olkiluoto project hit profitability, and together with the Enersense Offshore integration helped produce an EBITDA of EUR -1.0m. Connectivity and International Operations were able to grow at double-digit rates as Covid-19 was no longer a major issue, but their EBITDA declined due to inflation. Power grew a lot more than we expected and contributed to the group EUR 5.5m adj. EBITDA, compared to our EUR 2.7m estimate, as high revenue, project execution and Megatuuli acquisition drove profitability.

Cost inflationary effects on H2 figures remain to be seen

Enersense retains its guidance as the war causes some project delays this spring and hence Q2 figures will be relatively low. Q3 and Q4 should again be comparatively strong (winter and spring are always somewhat quiet), but inflation and material availability add to uncertainty. The underlying improvement pace in H2 is still unclear especially when acquisitions have complicated the picture. We revise our adj. EBITDA estimates down by 17% for the remainder of the year while our revenue estimate is almost intact. The war and its effects may have a short-term negative effect on Enersense’s performance, but its long-term consequences are likely to be beneficial ones as governments accelerate e.g. wind power investments.

We consider current valuation neutral

Enersense’s multiples for the next few years are still low relative to peers, assuming profitability continues to improve, whereas the multiples for FY ’22 represent a slight premium. We therefore argue the current valuation is overall fair in the current high inflation environment. Successful execution and strong underlying profitability in H2 would be a likely upside driver. We retain our EUR 8 TP. Our rating is now HOLD (BUY).

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Margins seem set to improve further during this year

Exel’s Q1 revenue grew 10% y/y to EUR 34.2m, compared to the EUR 37.1m/33.9m Evli/cons. estimates. All industries continued to grow except Wind power and Defense, where timing issues led to 8% y/y top line declines but for which long-term outlook has clearly improved in the past few months. The latter remains relatively small but has a lot more potential in markets such as India, while we believe China’s weakness also contributed to the decline of the former. Adj. EBIT amounted to EUR 2.2m vs the EUR 1.7m/1.4m Evli/cons. estimates. Product mix and variable cost inflation had a negative impact on profitability, masking some of the underlying positive development as Exel’s pricing adjusts with a lag of few months. Energy costs are also up, but Exel should be able to pass them on as well; we note Exel can also adjust already signed orders’ prices.

Guidance upgrade is much possible later this year

The US unit has now reached a break-even result; we estimate Exel’s EBIT margin continues to improve towards 7% and beyond during this year. We estimate 7.5% margin for H2’22, a level previously seen in H1’21 but with the difference that this year top line will be 15% higher. The Chinese restructuring will also produce EUR 0.7m in annual cost synergies. China’s virus situation pushed the Asia-Pacific region down 22% y/y in Q1; we believe there’s a good chance Exel will revise guidance upwards later this year, especially if Chinese demand normalizes and productivity further progresses in the US.

Valuation appears very conservative

We estimate EUR 10.2m adj. EBIT for this year, on which Exel is valued about 11x. Exel has additional profitability potential beyond that and is valued 8x EV/EBIT on our FY ’23 estimates. An 8.5% EBIT margin estimate doesn’t seem to be too high for next year, considering Exel reached a higher margin in FY ’20 while revenue will soon have grown by some 40% since then. There are no particularly relevant peers for Exel and hence valuation is a matter of judgment, but in our view Exel’s earnings-based multiples appear very undemanding in the short and long-term perspective. Our new TP is EUR 8.5 (9); we retain our BUY rating.

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Cost inflation was a greater challenge than we expected

Raute Q1 revenue grew 67% y/y to EUR 41m vs our EUR 34m estimate. Both projects (EUR 26m) and services (EUR 15m) came in higher than our respective EUR 21m and EUR 13m estimates. Raute delivered projects according to plan, without any major component issues, and recognized EUR 14m in Russian revenue (vs our EUR 12m estimate). Profitable execution in certain larger projects was challenged by cost inflation more than expected and the EUR -1.5m EBIT didn’t meet our EUR 0.2m estimate. The EUR 36m order intake topped our EUR 29m estimate as North American orders were EUR 15m, compared to our EUR 7m estimate, while the EUR 13m European order intake was close to our estimate. Modernizations contributed a significant share of order intake. Inflation may no longer be such a great challenge in the coming quarters, but Raute is not yet able to provide guidance for the year as there remains too much uncertainty around the delivery of the EUR 78m Russian order book.

Some encouraging signs on Western orders’ outlook

We now estimate EUR 38m Russian revenue for this year. We expect no big losses from the Russian deliverables, but neither do we estimate great profitability for the coming quarters. Raute’s established Western footprint helps it to withstand the loss of Russia; North America is a promising source for many additional smaller orders, including modernizations, while Europe could support larger mill projects in the years to come. The long-term demand outlook for Raute’s technology is sound as before, but the short-term capex picture is muddled by the war.

Western order levels will drive valuation over this year

We raise our FY ’22 revenue estimate to EUR 146m as we expect Europe, North America and Russia to contribute more than we previously did. Western orders will be a driver in the coming quarters as their level should shore up the following years’ revenue at least for a certain portion of the hole left by Russia. We expect no EBIT from Raute this year, but ca. EUR 6m could be possible next year if Western orders stay high over the course of FY ’22. Raute is then valued 7x EV/EBIT on our FY ’23 estimates. Our new TP is EUR 14 (15) as we retain our HOLD rating.

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Revenue growth scaled nicely
With the strong Q4’21 order book, Vaisala’s Q1 topline topped our expectations by growing by 29% y/y to EUR 118.8m (Evli: 108.6m). The growth was driven by IM’s industrial instruments and life science as well as W&E’s renewable energy and meteorology. While aviation saw the demand and orders growing, its Q1 sales yet declined y/y. With improved gross margin, revenue growth scaled nicely and EBIT over doubled from the comparison period. Group EBIT amounted to EUR 17.5m (14.8% margin).

W&E’s aviation took a big step in orders received
Vaisala’s future seems bright as the order book broke another record at EUR 168.5m. Aviation took a big step in recovery towards the pre-pandemic level in terms of orders received. We expect aviation to be one of the revenue growth drivers of W&E during the next quarters. Strong order development continued also in renewable energy, industrial instruments, and life science. Vaisala, once again, managed to deliver all its orders and IM succeed in capturing market share with its delivery reliability. In Q1, freshly acquired SaaS company AerisWeather contributed Vaisala’s topline by EUR 0.6m and EBIT by some EUR 0.1m. The acquisition supports execution of W&E’s strategy to drive growth in DaaS and SaaS recurring revenue businesses.

Low visibility of component availability continues
The component shortage had an impact on Vaisala’s Q1 gross margin of which impact was eventually offset by revenue scalability. Gross margin impact was smaller than in previous quarters, less than 1%-p. However, in Q1, the company made a commitment on spot component purchases, most of which will be realized later. In our understanding, the gross margin impact might be more visible during the next quarters. In addition, COVID-19 lockdowns in China might cause some extra constraints in Vaisala’s supply chains, resulting in postponed product deliveries or forcing the company to place additional spot-component purchases.

HOLD with a target price of EUR 45.0 (41.0)
Vaisala held its guidance intact, and with the same performance continuing, we find the guidance quite cautious. However, the market possesses an increasing amount of uncertainty. We have revised our near-term estimates upwards based on the strong Q1 result and record-level order book. Now, we expect 22E revenue to land near the upper bound of the guidance, at EUR 490.4m (+12% y/y). Revenue growth is driven by both business units: we expect IM to grow by 17.7% y/y and W&E to grow by 7.9% y/y in 2022. Our 22E EBIT estimate amounts to EUR 64.5m (13.1% margin). While the Q1 growth pace was rapid, in Q2 we expect the slope of revenue growth to smoothen. On a group level, we expect the topline to grow by 7.9% y/y to EUR 118.1m. In our understanding, Q1 included some seasonality, and hence we expect Q2 revenue to be approx. flat q/q, while in previous years, Q1 has been the calmest quarter, especially in W&E. We expect the gross margin to be a bit softer than in the previous year, but scalability to improve the Q2 profitability y/y to EBIT of EUR 12.5m (10.6% margin). With our upgraded estimates, Vaisala (22E EV/EBITDA ~18x) is still trading with a premium to its peers (22E EV/EBITDA ~16x). We find the premium justified but still remind that valuation stretches. We retain our HOLD rating and raise our TP to EUR 45.0 (41.0).

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• Q1 revenue was EUR 53.8m, compared to our EUR 54.2m estimate. Smart Industry amounted to EUR 16.6m vs our EUR 22.5m estimate, while Power was EUR 14.3m vs our EUR 11.2m estimate. Connectivity came in at EUR 9.3m, compared to our EUR 8.6m estimate, International Operations EUR 13.5m vs our EUR 11.9m estimate.
• Adjusted EBITDA landed at EUR 5.5m vs our EUR 2.7m estimate. EBIT was EUR 3.2m, compared to our EUR 0.4m estimate.
• Order backlog was EUR 295.5m at the end of Q1.
• Enersense expects Q2 to be the weakest quarter this year in terms of profitability as the war has caused delays in projects during the spring. Inflation, material availability issues and virus infections can also delay projects and impair their profitability.
• Enersense guides EUR 245-265m in revenue and EUR 15-20m in adjusted EBITDA for FY ’22 (unchanged).

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• Q1 revenue grew by 67% y/y and was EUR 41.3m, compared to our EUR 34.0m estimate. Russian revenue amounted to EUR 14m, compared to our EUR 12m estimate.
• EBIT came in at EUR -1.5m, compared to our EUR 0.2m estimate. Inflation had a significant negative effect on the results.
• Order intake amounted to EUR 36m during the quarter, compared to our EUR 29m estimate. The figure does not include any major mill projects. Project orders were EUR 16m vs our EUR 14m estimate. Service orders were EUR 20m vs our EUR 15m estimate. Especially North American orders, at EUR 15m, were high and topped our EUR 7m estimate.
• Order book stood at EUR 152m at the end of Q1, of which EUR 78m is attributable to Russia.

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•    Group results: Orders received were EUR 125m (18% y/y) and the order book totaled EUR 168.5m (8% y/y). Net sales grew by 29% y/y to EUR 118.8m (108.6m/104.5m Evli/cons.), driven by both BUs. Growth scaled nicely, and EBIT amounted to EUR 17.5m (9.6m/10.1m Evli/cons.), implying a 14.8% margin. 
•    Industrial Measurements (IM): Orders received increased by 19% to EUR 54.7m while the order book stood at EUR 35.1m (41% y/y). Order intake was strong in industrial instruments and life science. IM saw a 34% y/y growth, with net sales totaling EUR 53.1m (Evli: 49.1m). The topline growth was driven by all IM’s segments. Operating profit was EUR 14.6m, 27.5% of net sales. Increased fixed costs affected EBIT negatively.
•    Weather & Environment (W&E): Orders received increased by 17% y/y to EUR 70.3m. The order book was strong and grew by 2% y/y to EUR 133.4m. Order intake grew in renewable energy and aviation while ground transportation and meteorology decreased y/y. W&E delivered very strong growth of 26% y/y in Q1, net sales totaling EUR 65.7m, beating our estimates (Evli: 59.5m). Supported by ~50% gross margin EBIT amounted to EUR 2.9m, implying a 4.4% margin.
•    2022 guidance unchanged: Net sales between EUR 465–495m and EBIT between EUR 55–70m.
•    Market outlook: Markets for high-end industrial instruments, life science, power industry, and liquid measurements are expected to continue to grow while meteorology and ground transportation are expected to be stable. Aviation market is expected to recover towards pre-pandemic level. Renewable energy market is expected to continue to grow.

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• Q1 revenue grew by 10.3% y/y and landed at EUR 34.2m, compared to the EUR 37.1m/33.9m Evli/consensus estimates. Growth stemmed from Europe and North America. The virus situation in China led to a revenue decline in the Asia-Pacific region.
• Wind power amounted to EUR 6.8m, compared to our EUR 8.3m estimate, while Buildings and infrastructure was EUR 7.7m vs our EUR 8.5m estimate. Equipment and other industries came in at EUR 7.4m vs our EUR 7.1m estimate.
• Adjusted EBIT was EUR 2.2m vs the EUR 1.7m/1.4m Evli/consensus estimates. The US unit no longer had a negative impact as employee turnover has decreased and production yield has improved. Product mix as well as higher raw material, energy and logistics costs had a negative impact on profitability, but Exel continues to adjust sales prices to catch up with costs.
• Order intake amounted to EUR 37.6m, down by 10.5% y/y.
• The war has not so far limited raw material availability from Exel’s perspective.
• Exel guides revenue in 2022 to be at last year’s level and adjusted operating profit to increase compared to 2021 (unchanged).

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Record-level earnings in Q1 driven by investment returns
CapMan reported record-level Q1 earnings aided by strong investment returns. Turnover amounted to EUR 14.2m (EUR 19.6m/17.2m Evli/cons.) and EBIT to EUR 18.9m (EUR 10.7m/4.1m Evli/cons.). Despite the market uncertainty FV changes were at EUR 14.7m (Evli EUR 4.0m). No notable weakness was seen in any of the operating segments. Capital under management grew well to EUR 4.75bn, up some 5.2% q/q and 22.1% y/y. CapMan reported carried interest from the NRE I -fund.

Expectations for 2022 remain good across the board
We have revised our estimates upwards based on the strong Q1 and better than expected outlook for investment returns. We now expect an operating profit of EUR 61.8m (51.6m) in 2022. Headwind from the on-going war in Russia does not appear to have materialized in any notable way for CapMan apart from the write-downs of the remaining fund holdings and receivables in Q1. In the short-term investment returns are still under some uncertainty, while a deterioration of investor sentiment could have a longer-term impact through current fundraising projects. With the catch-up in NRE I our carry expectations are more strongly set for H2, with the Growth Equity fund also approaching carry. Growth in capital under management is providing good support for the recurring fee-based revenues and we expect CapMan to reach a EUR 10m+ quarterly management fee level in 2022.

BUY with a target price of EUR 3.4 (3.2)
Although there clearly is some market uncertainty present, the expected impact currently does not appear too be considerable. With our raised estimates, in no way challenging earnings multiples, and healthy dividend yields, CapMan in our view remains an attractive investment case. We raise our TP to EUR 3.4 (3.2) and retain our BUY-rating.

Open report

• Net sales in Q1 were EUR 59.8m (EUR 59.3m in Q1/21), slightly below our and consensus estimates (EUR 63.3m/64.4m Evli/Cons.). Sales grew 0.9% y/y.
• Operating profit in Q1 amounted to EUR 0.4m (EUR 0.1m in Q1/21), slightly above our estimates and in line with consensus (EUR 0.0m/0.4m Evli/cons.), at a margin of 0.6%.
• The increase in construction materials prices had a somewhat higher impact than in the comparison period, COVID also had an impact primarily through increased sick leaves.
• EPS in Q4 amounted to EUR 0.01 (EUR -0.02 in Q1/21), slightly below our estimates and in line with consensus (EUR -0.03/0.01 Evli/cons.).
• The order backlog in Q1 was EUR 205.1m (EUR 196.5m in Q1/21), up by 4.4% y/y. Order intake was EUR 37.6m in Q1 (Q1/21: EUR 69.8m).
• Free cash flow amounted to EUR -0.8m (Q1/21: EUR -2.9m).
• Guidance for 2022 (reiterated): Operating profit is expected to be between EUR 9-13m.

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EBIT fell short of expectations
Verkkokauppa.com’s Q1 net sales decreased by 6.9% y/y to EUR 124.8m beating our expectations (Evli: EUR 120.1m). As expected, the drivers behind the decline were the poor performance of core categories in the consumer segment as well as the exports segment. The company ended exports to Russia and the segment declined by ~30% y/y in Q1. Though market environment increased the price competition which correspondingly reduced the gross margin to 15.4%. In addition, the sales mix within core categories harmed the gross margin. Fixed costs saw an increase due to personnel investments and inflationary pressures in the other costs. The combination of lower gross margin and increased fixed costs downgraded adj. EBIT stronger than we expected to EUR 0.9m (Evli: EUR 2.1m), implying an adj. EBIT margin of 0.7%. Poor profitability pressed the bottom line near zero and EPS amounted to EUR 0.00 (Evli: EUR 0.03).

Evolving categories performed well
While core categories saw a decline of 7.9% y/y, the sales of higher-margin evolving categories evolved, and the product segment grew by 10.2% y/y, representing 12.4% of total Q1 sales. The growth of the evolving categories was driven by toys, baby & family, sports equipment, and luggage product categories. In Q1, online sales decreased by 4.8% y/y following lower total sales and represented 63 % of the total sales. The consumer segment represented 68% of total sales while with sales growth of 10.4% B2B segment was 26% of total sales. With Russian exports ended, the export segment represented only 5% of total sales.

Growth requires a recovery of the consumer segment
Although, evolving categories and B2B delivered double-digit sales growth in Q1, in order to achieve topline growth, Verkkokauppa.com needs the consumer segment to recover. Consumer trust in Finland further decreased in April which reflect in the company’s demand explicitly. The outlook for H2 is still blurred and it might take a while for a recovery of demand for durable goods. The company noted that it sees inflationary pressures stemming partly from personnel investment but increasingly from Verkkokauppa.com’s service providers. Logistics costs are set to rise, but on the other hand, commissioning of automated warehouse offset increased costs somewhat. The company also invested in its IT capabilities by recruiting ~10 new employees which increased the personnel costs in Q1. We expect 22E fixed costs to increase to 12.6% of net sales. We also expect material costs to increase due to global supply chain problems and inflationary pressures.

HOLD with a target price of 4.3 (4.7)
We revised our short-term estimates, reflecting increased cost pressures, uncertainty, and low visibility of H2’22. With the consumer segment’s poor performance in H1 and Q3, we expect Verkkokauppa.com‘s 22E revenue to decrease by 2.4% y/y to EUR 560.8m. Driven by increased fixed costs and low volumes, we expect EBIT to be near the lower bound of the company’s guidance, at EUR 12.7m (2.3% margin). In our estimates, the company faces topline growth of 6.5% and 8.3% during 2023-24. Driven by scalability and investment into efficiency, we expect the company to report EBIT margins of 3.4% and 4.1% during 2023-24. Furthermore, in Q2 we expect a good performance of evolving categories to soften the decline of consumer electronics. We also expect the B2B segment to continue double-digit revenue growth while expecting the export segment to decrease significantly due to the end of exports to Russia. We expect the Q2 topline to decrease by 5.2% y/y to EUR 123.7m. We expect Q2’22 gross margin (16.7%) to improve q/q but be below that of the comparison period. Q/q improvement is driven by an increased share of evolving categories. Our Q2 EBIT estimate lands at EUR 2.4m (2% margin). With our revised 2022 estimates, the company trades with a premium to its peers. With the EV/EBIT multiple taking balance sheet into account, Verkkokauppa.com’s valuation starts to seem moderate in 2023 (23E EV/EBIT of 8.6x), but we find no reason to hurry as long as the consumer market environment seem uncertain. With Verkkokauppa.com's valuation stretched and uncertainty concerning the near future, we retain our HOLD rating and adjust TP to EUR 4.3 (4.7).

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Write-downs on essentially all holdings related to Russia
SRV reported its Q1 results, with the main topic clearly being the write-downs to its operations in Russia and the announced program to strengthen the balance sheet. Operationally, Q1 was slightly better than expected. Construction revenue amounted to EUR 175.2m (Evli 186.7m) and operative operating profit 6.3m (Evli EUR 5.2m). The Group operating profit was clearly negative, at EUR -85.7m, as SRV wrote-down essentially all of its holdings in Russia and the Fennovoima project. The order backlog was at EUR 858m in Q1, down 19% y/y. SRV however says that it has 1.4bn worth of won contracts not yet in the order backlog.

Initiated program to strengthen balance sheet
SRV initiated a program to strengthen its balance sheet (illustrated in Figure 1 of this report), seeking to increase equity by around EUR 100m and reduce IB net-debt by the same amount, due to the impact of the write-downs on SRV’s equity and gearing. Operationally, we have made no significant changes to our estimates, expecting revenue of EUR 877.8m and operative operating profit of EUR 22.9m. The uncertainty relating to material prices and availability has increased due to the war in Ukraine, with some more bulk type construction material such as steel used in reinforcing concrete in particular being affected. So far, the impact does not appear to have limited SRV’s abilities to run current operations.

HOLD with a target price of EUR 0.35 (0.54)
Although SRV’s Russian assets still hold some value, due to the current uncertainty valuation relies primarily on construction operations. On 2022e EV/EBIT (using operative operating profit), SRV trades at 14.6x. We lower our TP to EUR 0.35 (0.54) and retain our hold rating. We will account for the impact of the financing program once details are finalized.

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Q1 well in line with expectations
Solteq reported Q1 result well in line with our expectations. Net sales were EUR 19.2m (Evli EUR 18.9m), with growth of 10.7%. Roughly a third of the growth was organic. The operating profit and adj. operating profit in Q1 amounted to EUR 1.4m and 1.6m respectively (Evli EUR 1.5m/1.5m). Solteq Software’s and Solteq Digital’s y/y growth and adj. EBIT figures were 5.6%/19.7% and EUR 1.5m/0.1m respectively, with both segments faring quite as expected. Solteq reiterated its guidance, expecting group revenue to grow clearly and the operating profit to improve.

Double-digit growth seen in 2022
We have made essentially no changes to our top-line and bottom-line figures. We expect revenue to grow 11.6% y/y in 2022e. Our growth estimates assume continued modest growth in Solteq Digital and over 20% growth in Solteq Software, in line with the long-term segment targets of over 5% and 20% growth. Solteq Software’s growth is clearly aided by the acquisition of Enerity Solutions, but we see organic growth picking up through good demand and ramp-up of recurring revenue. We expect EBIT to improve to EUR 7.7m (2021: 7.1m) through slight gains in both segments. We expect Solteq Digital’s margins to remain steady in the coming years. For Solteq Software we expect the scalability potential to start to show in the coming years.

BUY with a target price of EUR 5.0
Solteq’s valuation is currently slightly below the IT-services peer median, which in our view is unjustified given the healthy growth and profitability trend and expectations and increasing share of recurring revenue. We value Solteq at ~20x 2022e P/E. Our target price remains EUR 5.0 and rating BUY.

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Network pivots to West and South Asia

Finnair’s EUR 400m Q1 revenue and EUR -133m adj. EBIT matched the respective EUR 397m/391m and EUR -128m/-141m Evli/cons. estimates. Air travel recovers and Omicron caused only a brief but sharp dip in volume. Finnair sees the ratio of bookings relative to capacity now above the pre-pandemic levels as available capacity has been reduced. Major North Asian hubs such as Tokyo, Seoul and Shanghai will remain on the schedule, but the Russian airspace closure will limit possibilities to smaller North Asian cities. South Asia’s weight will increase as it supports transfer flights to the US and hence Finnair’s network will also pivot to West, where demand is now robust.

Volume outlook prompts us to raise estimates

We raise our estimates as our previous view on volumes seems a bit low in the light of Finnair’s comments on capacity over the summer (we assume some 60-70% load factors for Q2 and Q3). Finnair has already signed leases and the comments on them indicate such deals are now profitable when many Western airlines have need for additional capacity. These can add other operating income some EUR 10-100m annually. Finnair also looks for EUR 60m in further permanent cost savings. The network adjustments, fleet redeployments (including potential aircraft sales) and cost measures didn’t come as a surprise, although these may help Finnair guard profitability better than we initially expected. We upgrade our revenue estimates by more than 10% while we also revise our EBIT estimates up a bit, but there remains a lot of uncertainty around volumes and costs.

Finnair will come through, but upside is still not evident

The EUR 400m hybrid between the State and Finnair will convert to a capital loan and thus supports equity. In our view high demand helps Finnair to successfully maneuver the challenges, but medium to long-term profitability potential remains unclear in the current high inflation environment. Finnair is valued a bit below 14x EV/EBIT on our FY ’24 estimates, still not a low level although our FY ’23 EBIT estimate could prove too conservative. We retain our EUR 0.43 TP; our rating is now HOLD (SELL).

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• Revenue in Q1 was EUR 190.7m (EUR 187.1m in Q1/21), quite in line with our and consensus estimates (EUR 186.7m/179.0m Evli/Cons.). Growth was 2% y/y.
• Operating profit in Q1 amounted to EUR -85.7m (EUR 5.2m in Q1/21), below our estimates and consensus estimates (EUR 3.2m/2.2m Evli/cons.), at a margin of -44.9%. SRV wrote-down the value of essentially all of its holdings in Russia, which had a clear negative affect on EBIT. Operative operating profit amounted to EUR 4.9m, above our estimate of EUR 3.2m.
• EPS in Q1 amounted to EUR -0.51 (EUR 0.00 in Q1/21), clearly below our estimates and consensus estimates (EUR 0.00/0.00 Evli/cons.).
• The order backlog amounted to EUR 858m, down 19.1% y/y.
• Construction revenue in Q1 was EUR 175.2m vs. EUR 186.7m Evli. Operative operating profit in Q1 amounted to EUR 6.3m vs. EUR 5.2m Evli. 
• Investments revenue in Q1 was EUR 1.1m vs. EUR 1.1m Evli. Operative operating profit in Q1 amounted to EUR -105.4m vs. EUR -1.0m Evli. 
• Other operations and elim. revenue in Q1 was EUR 14.4m vs. EUR -1.1m Evli. Operative operating profit in Q1 amounted to EUR 13.4m vs. EUR -1.0m Evli. 
• Guidance for 2022 (reiterated): Revenue is estimated to be EUR 800-950m and the operative operating profit is expected to improve compared with 2021

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• Net sales in Q1 were EUR 19.2m (EUR 17.4m in Q1/21), in line with our estimates (Evli EUR 18.9m). Growth in Q1 amounted to 10.7% y/y, of which approximately a third was organic growth. 
• The operating profit and adj. operating profit in Q1 amounted to EUR 1.4m and 1.6m respectively (EUR 2.2m/2.3m in Q1/21), in line with our estimates (Evli EUR 1.5m/1.5m). 
• Solteq Digital: revenue in Q1 amounted to EUR 11.8m (Q1/21: EUR 11.2m) vs. Evli EUR 12.0m. Growth amounted to 5.6%. The adj. EBIT was EUR 1.5m (Q1/21: EUR 1.4m) vs. Evli EUR 1.5m. Demand in key areas, such as digital business and commerce solutions, is expected to remain good during the on-going quarter. 
• Solteq Software: Revenue in Q1 amounted to EUR 7.4m (Q1/21: EUR 6.2m) vs. Evli EUR 6.9m. The adj. EBIT was EUR 0.1m (Q1/21: EUR 0.9m) vs. Evli EUR 0.0m. Growth was 19.7%. The business outlook is expected to remain positive.
• Guidance for 2022 (reiterated): group revenue is expected to grow clearly and operating profit to improve.

Open report

• Turnover in Q1 was EUR 14.2m (EUR 11.3m in Q1/21), below our estimates and consensus estimates (EUR 19.6m/17.2m Evli/Cons.). Growth in Q1 amounted to 26% y/y.
• Operating profit in Q1 amounted to EUR 18.9m (EUR 10.1m in Q1/21), clearly above our estimates and consensus estimates (EUR 10.7m/4.1m Evli/cons.), at a margin of 132.8%. Compared with our estimates, FV changes were significantly higher (14.7m/4.0m act./Evli), carried interest lower (6.5m/1.3m act./Evli).
• EPS in Q1 amounted to EUR 0.09 (EUR 0.05 in Q1/21), above our estimates and consensus estimates (EUR 0.05/0.02 Evli/cons.).
• Management Company business turnover in Q1 was EUR 11.7m vs. EUR 17.3m Evli. Operating profit in Q1 amounted to EUR 4.4m vs. EUR 7.2m Evli.
• Investment business revenue in Q1 was EUR 0.0m vs. EUR 0.0m Evli. Operating profit in Q1 amounted to EUR 14.5m vs. EUR 3.8m Evli.
• Services business revenue in Q1 was EUR 2.5m vs. EUR 2.3m Evli. Operating profit in Q1 amounted to EUR 1.4m vs. EUR 1.2m Evli.
• Capital under management by the end of Q1 was EUR 4.75bn (Q1/21: EUR 3.9bn). Real estate funds: EUR 3.2bn, private equity & credit funds: EUR 1.1bn, infra funds: EUR 0.4bn, and other funds: EUR 0.1bn.

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•    Group result: Q1 revenue declined by 6.9% y/y to EUR 124.8m (EUR 120.1m/120.1m Evli/cons.) driven by the soft performance of the consumer segment. A challenging environment led the market to fierce price competition which can be seen in a drop in margins. Sales mix had also a negative impact on gross margin. Gross margin decreased from the comparison period to 15.4% (Q1’21: 16.2%). Lower gross margin, poor scalability through low volumes, and higher transportation costs had a negative impact on profitability, adj. EBIT totaling EUR 0.9m (EUR 2.1m/2.9m Evli/cons.), reflecting an adj. EBIT margin of 0.7%.
•    Online sales represented 63% (Q1’21: 64%) of total sales while the main categories were 87.6% (Q1’21: 89.5%) of total sales.
•    Consumer segment: Consumer segment suffered from a soft market environment mainly driven by consumer electronics, and the segment declined clearly from the comparison period. Consumer segment represented 68% of total sales (Q1’21: 72%). However, evolving categories saw a 10.2% y/y growth during Q1, driven by sports, kid’s supplies, bags & traveling, and toys.
•    B2B segment: B2B performed well and grew by 12% y/y, representing 26% of total sales (Q1’21: 22%).
•    Exports segment: end of Russia exports had a negative impact (-30.5% y/y) on exports that represented only 5% of total sales.
•    FY’22 guidance (revised on March 23rd): net sales between EUR 530-590m and EBIT between EUR 12-19m.

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IBU grew very strongly
In Q1, IBU faced a revenue growth of 45.2% y/y, the BU’s topline totaling EUR 3.5m (Evli: EUR 2.9m). The growth was driven by all IBU’s main segments: imaging solutions for the food, pharmaceutical, and mining industries. The BU was forced to postpone some of its deliveries due to low component availability. MBU’s growth drivers remained unchanged: Q1 revenue growth was mainly driven by CT applications in both developing and developed countries. Lockdowns in China and low component availability slowed down the development of MBU’s sales. MBU grew by 4.5% y/y to EUR 10.5m (Evli: EUR 10.9m). SBU’s Q1 revenue amounted to EUR 6.3m and the growth of 7.5% y/y was mainly driven by non-aviation applications. In total, group net sales grew by 10.9% y/y to EUR 20.3m (Evli: EUR 21.1m). 

Increased R&D investments and material costs cut margins
DT invested more heavily into R&D to mitigate the impacts of the component shortage. R&D costs were 14.5% of net sales in Q1 (Q1’21: 13.1%). In addition, component purchases made in spot markets increased DT’s material costs somewhat. Q1 EBIT faced a slight improvement from the comparison period and amounted to EUR 1.5m (7.4% margin). Earnings per share amounted to EUR 0.09 (Evli: EUR 0.08). As soon as the component availability improves, either through the product modernization program or increase of market supply, we expect the scalability to kick in. In history, DT has generated EBIT margins around 20%, but we find those levels far fetch nowadays as, at that time, the organization was quite thin compared to today. Our 25E EBIT margin estimate is ~17%.

The demand for detectors will continue strong
The demand DT faces is strong, and all factors indicate the trend to continue. With new order allocations, the TSA’s CT upgrade program has seen progression. However, in our understanding, the topline impact in 2022 is more moderate while most of the orders will be delivered in the coming years. The component availability is still low and a significant part of Q1 deliveries was postponed. In Q1, DT focused on the modification of its product portfolio so that the most rarely available components can be replaced by the components with more reliable availability. According to the company, the program starts to impact the figures in early Q3 and increasingly in Q4. With the program, the company achieves better availability and more reliable deliveries as well as the need of purchasing less spot-priced components. With the component availability improving in H2 through the product modification program, we expect the strong demand to actualize in H2.

HOLD with a target price of EUR 22.5
We slightly upgraded our topline estimates reflecting strong outlook in H2’22 while our 22E EBIT estimate saw only a minor negative revision due to increased cost pressures. In 2022, we expect group revenue to grow by 14.7% y/y to EUR 103m and EBIT to amount to EUR 14.8m (14.4% margin). In Q2, we expect, in line with DT’s outlook, MBU to face a slight decline of 2.7% y/y, net sales totaling EUR 13.2m. In our estimates, SBU and IBU will grow more strongly. SBU’s Q2 revenue amounts to EUR 8.8m, representing a growth of 27.9% y/y while IBU also sees strong growth of 33.8% y/y, net sales totaling EUR 4.1m. Group level Q2 topline amounts to EUR 26.1m (+11% y/y). Driven by increased material costs and R&D investments, we expect OPEX to grow and EBIT to amount to EUR 3.4m (13% margin) in Q2. DT’s valuation appears again quite elevated. With our 2022 estimates, the company trades with a premium to its peers, but in 2023 DT’s valuation drops near the peer group. In our view, DT’s business still faces short-term uncertainty given low component availability and lockdowns in China, country that is crucial to DT in terms of supply chain, production, and sales. We retain our HOLD rating and TP of EUR 22.5.

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• Group results: Q1 net sales grew by 10.9% y/y to EUR 20.3m (EUR 21.1m/21.7m Evli/cons.) driven by all DT’s business units. Operating profit improved and grew by 9% y/y to EUR 1.5m (EUR 1.9m/2.1m Evli/cons.), indicating an EBIT margin of 7.4%. Soft scalability was driven by increased material costs and stronger investments into R&D to tackle the component shortage. Operative cashflow was down 39% y/y, totaling EUR 0.7m. R&D costs were 14.5% of net sales (Q1’21: 13.1%).
• Medical (MBU): medical segment grew by 4.5% y/y to EUR 10.5m (Evli: EUR 10.9m). Growth was strong in CT applications both in developing and developed countries.
• Security (SBU): security experienced an increase of 7.5% y/y, net sales totaling EUR 6.3m (Evli: EUR 7.3m). Despite the demand for aviation solutions has increased significantly, Q1 growth was still driven by applications other than those used in the aviation sector.
• Industrial (IBU): net sales came in strong and grew by 45.2% y/y to 3.5m (Evli: EUR 2.9m). The demand was strong in all IBU’s main segments: imaging solutions for the food, pharmaceutical, and mining industries.
• The company had ongoing project to design product modifications to its entire product portfolio to mitigate the challenges in the availability of special materials and electronic components.
• FY’22 outlook: IBU and SBU to show double-digit growth in Q2 and MBU to decrease in Q2. Group net sales to grow by double-digit figures in Q2, H1 and H2.
  

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• Q1 revenue was EUR 399.8m, compared to the EUR 396.6m/390.9m Evli/consensus estimates.
• Adjusted EBIT amounted to EUR -132.9m vs the EUR -128.2m/-141.4m Evli/consensus estimates.
• Fuel costs were EUR 137m, compared to our EUR 115m estimate. Staff costs were EUR 102m vs our EUR 89m estimate. All other OPEX+D&A amounted to EUR 310m vs our EUR 333m estimate.
• Cost per Available Seat Kilometer was 7.70 eurocents vs our estimate of 7.59 eurocents.
• Finnair sees Q2’22 adjusted EBIT around the same level as that of Q4’21 (EUR -65m). Finnair expects to deploy, in the summer season of Q2 and Q3 this year, approximately 70% of the ASK it did during the comparison period of 2019. Leases to other airlines will raise the figure to almost 80%. The company also sees Q3 demand to be close to the pre-pandemic times in Europe, North America and South Asia (India, Singapore and Thailand).
• Finnair seeks to find EUR 60m in additional permanent cost savings on top of the already achieved EUR 200m.

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Growth picked up in H2/21 and is seen to continue
Consti reports its Q1 results on April 29th. Consti was able to turn to a clearer track of growth during H2/2021 and our expectations are for the growth to continue going into 2022. The growth was to a smaller part aided by the acquisition of RA-Urakointi Oy, specializing in renovations of apartment and row housing companies. The larger share of growth came from the improved order intake, with the order backlog up 22.9% at the end of 2021, aided also by Consti’s first projects within new construction. Profitability was to some degree affected by rising material prices, with the impact slightly larger in the latter half of the year.

Additional material pricing and availability concerns
The on-going Ukraine crisis has further affected the situation with construction material prices and availability. The renovation market is less dependent on larger quantities of construction materials and for instance the need for steel construction parts, which have seen prices increase above previous year levels, is low compared with new construction. Nonetheless, pricing and availability issues are being seen in areas that also affect the renovation market. For now, we have pre-emptively slightly lowered our Q1 profitability estimates. We see pressure on profitability going forward and seek to gain further clarity on the matter from the Q1 report.

BUY with a target price of EUR 13.0 (14.0)
With the uncertainty relating to material pricing and availability we slightly lower our target price to EUR 13.0 (prev. EUR 14.0). We continue to see that Consti through its renovation focus will be less affected but affected nonetheless. We retain our BUY-rating.

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Q1 wasn’t great, but Q2 will already be much better

Suominen flagged in its Q4 report Q1 demand to be again on the low side as certain customers, particularly in the US, still suffer from destocking. We see no changes to this Q1 picture. Some logistics bottlenecks likely continue to persist, although in general pandemic disruptions are subsiding. We also believe wiping demand remains structurally above the pre-pandemic level, including in categories like hard surface disinfecting wipes and moist toilet tissue, and hence top line and margins should again improve after a muted Q1. Margins are to rebound from the recent lows as Suominen has in the past few years tilted towards mechanism pricing, which helps now when raw materials prices stay high. Suominen has had no meaningful Russian sales or sourcing, but the war affects the European plants’ profitability through higher energy costs. Suominen has implemented an energy surcharge on all European products (there have been no major energy issues in the US). This will not save Q1 results, but we understand the customers have accepted the surcharge well and it supports margins from Q2 onwards.

We estimate significant profitability improvement for H2

We make only small estimate changes on an annual level. We now expect FY ‘22 revenue to top the record FY ’20 figure; we however estimate profitability to be some EUR 20m below the respective figure especially due to muted H1. We revise our Q1 EBITDA estimate to EUR 4.8m (prev. EUR 5.8m) as Suominen’s mechanism pricing and energy surcharge lag the inflation seen early this year. We see H1’22 EBITDA down by 57% y/y, however we estimate H2’22 EBITDA to increase by 92% y/y and 75% h/h.

Valuation is by no means challenging on our estimates

Suominen is valued 5.5x EV/EBITDA and 11x EV/EBIT on our FY ’22 estimates. In our view these aren’t very high levels and would be down to about 4x and 6.5x in FY ’23 if profitability continues to improve as we expect. We revise our TP down to EUR 4 (5) as higher raw materials and energy prices have elevated uncertainty around the estimates, but we retain our BUY rating.

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Revenue development affected by absences due to sickness
Innofactor’s Q1 results were two-fold. Revenue development was weaker than expected, declining 1.5% y/y in comparable terms to EUR 17.0m (Evli EUR 17.7m). Growth was affected by absences due to sickness as a result of the pandemic, which approximately doubled in Q1 from the previous year, and revenue in Finland and Sweden decreased. Despite the lower revenue profitability was still at a fairly good level, with EBITDA of EUR 2.0m (Evli EUR 1.8m) and a corresponding margin of 12.0%. The performance in Denmark and Norway was good according to management. The order backlog grew only 3.5% to EUR 71.3m, but Innofactor has received several significant orders not yet in the backlog and the growth could as such have been better.

Slight growth and profitability improvement in 2022
Innofactor expects revenue to grow y/y and EBITDA to improve from EUR 7.5m in 2022. Growth continues to be somewhat challenging, although the impact of sick leaves should reasonably decline going forward. Innofactor has had success in recruitments, namely within younger talents, and the headcount turned to a very slight growth. With minor estimates adjustments we now expect growth of 2.4% and an EBITDA of EUR 8.4m (12.4% of sales). In the near-term, being able to improve utilization rates could bring a boost to financials, while more rapid growth would in our view require M&A activity.

BUY with a target price of EUR 1.6
With our estimates largely intact we retain our target price of EUR 1.6 and BUY-rating. Innofactor’s growth outlook is currently admittedly rather lack-luster, but the market situation remains good, and growth and profitability improvement potential and rather healthy expected dividend yields support the case.

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Vaisala faces strong demand in Q1
Vaisala reported strong order book in its Q4’21 financial bulletin. W&E’s order book amounted to EUR 127m while IM’s order book was on a record level at EUR 33m. Q1 has typically been the quietest quarter for Vaisala, and we expect topline to grow by 18.1% y/y to EUR 108.6m driven by a strong demand for IM’s applications and W&E’s soft comparison period. In our estimates, W&E reports a revenue of EUR 59.5m (+14% y/y) while after successful Q1 IM achieves a topline of EUR 49.1m (+24% y/y), representing almost half of group net sales.

EBIT margin to remain flat
Despite ongoing component shortage, the company has been able to deliver all its orders so far. We expect the company to continue component purchases from spot markets and thereby material costs to stay at elevated level. However, the company has transferred some increased material costs to consumer prices in early 2022 and, hence, we expect gross and EBIT margin to remain approx. flat compared to Q1’21. Our W&E Q1 EBIT estimate lands to EUR -1.5m while we expect IM to report an EBIT of EUR 11.4m. In total, our Q1 EBIT estimate amounts to EUR 9.6m (8.8% margin).

HOLD with a target price of EUR 41.0
In our view, Vaisala’s valuation is quite elevated. Vaisala trades with 22E EV/EBITDA and EV/EBIT multiples of 17.7x and 24.1x while its peer group is valued with corresponding multiples of 16.2x and 18.3x. In short-term, we find no reason for an upside in Vaisala’s valuation, but given solid earnings growth, as a long-term investment, we find it reasonable to stay on Vaisala’s board ahead of Q1 result. With our estimates intact, we retain our HOLD rating and TP of EUR 41.0. 

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Russia’s absence will be felt especially in the short-term

Raute will deliver its previously signed Russian orders to the extent feasible, case by case, and the company will not sign any new Russian orders for now. Raute has a staff of about 40 in Russia, but other than that no local assets. Raute is therefore not precisely exiting Russia, however we believe the Russian business will gradually shrink to zero and stay there for the foreseeable future. Russia has historically been a very important market for Raute as orders from the country averaged more than EUR 50m in recent years and there was good momentum until the end of last year; the Russian order intake amounted to EUR 79m in FY ’21 and we had estimated a similar amount of Russian revenue for this year. We cut this estimate down to some EUR 30m after the invasion. It remains unclear where the figure will land in the end, but we now expect around EUR 130m revenue for Raute vs the roughly EUR 175m estimate before the war.

Western markets’ strength is the best short-term remedy

In our view Europe and North America are the markets which could best help make up the Russian shortfall in the short-term. These established markets have historically belonged to the core of Raute’s strategy, and their order intakes also picked up last year after a few slower years. These markets’ strength could prove our short to medium term estimates too low. Latin America and Asia, especially China, also have long-term potential. Raute’s competitive positioning should in any case remain favorable, but we continue to see lots of uncertainty around financial performance and hence it’s hard to view current valuation particularly attractive.

We consider current valuation pretty much fair

In our view Raute’s financial profile hasn’t been altered much in the sense that the company should still be able to achieve EUR 10m EBIT with some EUR 150m revenue. Current valuation is cheap relative to this potential, but risks are related to e.g. Western orders’ strength in the short and medium term. Raute is now valued around 6x EV/EBITDA and 9x EV/EBIT on our FY ’23 estimates. We retain our EUR 15 TP and HOLD rating.

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• Net sales in Q1 amounted to EUR 17.0m (EUR 17.8m in Q1/21), slightly below our estimates (Evli EUR 17.7m). Net sales in Q1 declined 4.7% y/y and 1.5% in comparable terms. Net sales increased in Norway and Denmark but decreased in Finland and Sweden, affected by increased sick leaves due to the pandemic.
• EBITDA in Q1 was EUR 2.0m (EUR 2.1m in Q1/21, excl. Prime business divestment), slightly above our estimates (Evli EUR 1.8m), at a margin of 12.0%. EBITDA was positive in all operating countries except in Sweden.
• Operating profit in Q1 amounted to EUR 1.3m (EUR 1.3m in Q1/21, excl. Prime business divestment), above our estimates (Evli EUR 1.0m), at a margin of 7.8%. 
• Order backlog at EUR 71.3m, up 26.5% y/y. Innofactor received a handful of significant orders in Q1, for instance from the Finnish Ministry of Social Affairs and Health (approx. EUR 1.2m), the Housing Finance and Development Centre of Finland (approx. EUR 0.7m), Finnvera (approx. EUR 1.0m) and a Norwegian non-profit organization (EUR 1.2m).
• Guidance for 2022 (reiterated): Innofactor’s net sales is expected to increase from 2021 (EUR 66.4m) and EBITDA is expected to increase from EUR 7.5m, which would have been EBITDA without the proceeds of EUR 2.6m from the sale of the Prime business. 

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Market environment seen to impact Q1
CapMan will report Q1 earnings on April 28th. With the on-going Ukraine crisis and the impact on the market environment we expect some softness in the earnings. We anticipate seeing lower investment returns q/q given the weaker stock market development and resulting impact on valuation multiples. The direct impacts on investment objects however appear to be limited. As a reminder, CapMan has divested its market portfolio, which was a source of earnings weakness in the early stages of the pandemic. CapMan wrote-down the goodwill relating to its Russia business but still has some investments, commitments and receivables relating to the operations. We have pre-emptively assumed that some write-downs will be made. Our Q1 operating profit estimate is now EUR 10.7m (prev. EUR 16.7m).

Still set for clear earnings improvements y/y
Our 2022e estimates are down by 14% following the aforementioned adjustments and some further downward tweaks to our investment return estimates. Earnings are still set to improve considerably y/y, aided by carried interest, with the NRE I -fund expected to have entered carry during Q1. The uncertainty relating to the amount of carry is very high and the Q1 report should add needed visibility. We still see that CapMan is in a good position to achieve quarterly average earnings levels of EUR 10m+ in the near-term.

BUY with a target price of EUR 3.2 (3.4)
We have as mentioned made some adjustments to our estimates and accordingly finetune our target price to EUR 3.2 (prev. EUR 3.4). We retain our BUY-rating. Valuation based on multiples is still not challenging (2022e P/E <10x) and dividends continue to support the investment case.

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Profitability should improve throughout this year

Scanfil’s Q1 revenue grew by 20% y/y to EUR 197m, compared to the EUR 170/179m Evli/cons. estimates, and was up by 10% y/y excluding the EUR 17m in transitory spot purchases; inflation added around 2-3% to top line, hence volume growth amounted to about 7%. Growth stemmed widely from all the five segments, including also new customer accounts within Advanced Consumer Applications (kitchen machines for professional as well as consumer use). The EUR 10.3m EBIT was a bit above the EUR 9.2m/9.7m Evli/cons. estimates and the 5.3% margin wasn’t a surprise. The margin would have been 5.7% without the spot purchases, a decent figure but still well short of the 7% long-term potential as component availability issues persisted.

M&A unlikely short-term as organic execution claims focus

Components will remain scarce at least until Q4, however Scanfil’s guidance and comments imply there will be meaningful profitability improvement throughout this year. Inflation isn’t a major issue for Scanfil, and neither is the war likely to have any direct impact. The Chinese virus situation is probably the most significant short-term risk as it could lead to local production halts, but so far this hasn’t happened for Scanfil. Chinese demand also remains strong. Scanfil’s inventory levels are still elevated as the company tries to manage high customer demand and limited component availability. We estimate Scanfil to touch EUR 800m top line already this year. Inorganic growth doesn’t now seem to be that high on the agenda, but M&A could happen in North America or Asia within the next 3-5 years.

Earnings growth is likely to continue next year as well

Scanfil’s valuation, 7.5x EV/EBITDA and 10x EV/EBIT on our FY ’22 estimates, isn’t too demanding. We expect EBIT margin to remain a bit modest 5.8% this year as component issues persist, however we see the margin improving to above 6% in H2’22. We estimate 6.4% margin for FY ’23, and hence we expect Scanfil to reach an above EUR 50m EBIT next year as we see growth continuing at an above 5% annual rate from late ’22 onwards. FY ’23 multiples are therefore only around 6.5x EV/EBITDA and 8x EV/EBIT on our estimates. We retain our EUR 8 TP and BUY rating.

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• Scanfil Q1 revenue grew by 20.4% y/y and was EUR 196.6m vs the EUR 170.0m/179.4m Evli/consensus estimates. Transient spot market component purchases amounted to about EUR 17m and excluding them revenue would have been EUR 179m.
• Advanced Consumer Applications landed at EUR 55.0m, compared to our EUR 45.9m estimate, while Energy & Cleantech amounted to EUR 54.6m vs our EUR 45.5m estimate. Automation & Safety was EUR 42.6m vs our EUR 36.9m estimate.
• Adjusted EBIT was EUR 10.3m, compared to the EUR 9.2m/9.7m Evli/consensus estimates. Component availability issues limited Q1 profitability. Profitability should improve throughout the year while spot market component purchases are to remain high at least in Q2 and Q3.
• Scanfil guides FY ’22 revenue to be EUR 750-820m and adjusted EBIT EUR 43-48m. The war hasn’t had any significant financial impact on Scanfil, likewise with the Chinese virus situation so far.

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Finnair’s Asian strategy will now have to be reviewed

Q1 traffic was robust relative to expectations (the RPK metric was only 2% below our estimate) despite the lag due to slow Asian openings. South Korea opened only in the beginning of Q2, while Japan remains basically closed to foreigners and according to our understanding is unlikely to open before H2. China was previously set to open for H2, however even this conservative schedule may now be in question considering the very strict local virus policies. Asian flight volumes would thus remain subdued even without the closure of Russian airspace. The Siberian flightpath is unlikely to open in the foreseeable future and Finnair is revising its network plans in response to the fact that many Asian routes will not be profitable due to the added costs.

We make some further estimate cuts

Finnair is in the process of leasing out some of its resources which it cannot itself deploy under the circumstances. In our opinion some such deals, either leases or sales, seem inevitable given the scale of the problem as the Asian flights made more than 50% of Finnair’s pre-pandemic revenue. We cut our top line estimates by some 10% at this point; in the long-term Finnair may be able to employ some of its current idle capacity on new European and North American routes, but there may still be need for additional revenue estimate cuts. We revise our FY ’22 EBIT estimate to EUR -220m (prev. EUR -82m) and that for FY ’23 down to EUR 47m (prev. EUR 171m). Costs remain yet another issue as jet fuel prices have continued to surge to new records.

Profitability potential remains highly uncertain for now

Finnair had EUR 1.7bn in cash at the end of last year; the financial position and potential additional measures, be they leases or outright sales of aircraft, should help the company manage through the extraordinary period of challenge. Finnair was valued, before the war, in line with other carriers on FY ’23 estimates. It’s now very hard to say how Finnair’s next year will be like. Finnair is valued roughly 15x EV/EBIT on our FY ’24 estimates, but this still doesn’t seem like an attractive level. Our new TP is EUR 0.43 (0.60), and our rating is now SELL (HOLD).

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Early guidance revision
In mid of March, the company downgraded its FY’22 guidance. Now the company guides a revenue of EUR 530-590m and an EBIT of EUR 12-19m, which implies a decline in the earnings. Demand for consumer goods has been soft since Q4’21 and Russia’s attack on Ukraine further lowered the consumer trust in Finland. Increased consumption of services has also diminished the demand for durable goods. In addition, the stop of Russian exports will cut approx. EUR 20m of Verkkokauppa.com’s annual sales.

Soft market cuts growth opportunities
The company’s management noted that the market environment hasn’t changed since the guidance revision. We expect the company to suffer from weak demand in H1 and Q3, but in our estimates, Verkkokauppa.com sees a clear upward drift in Q4 driven by a weak comparison period and improved demand in the consumer segment. In Q1, we expect revenue to decrease by 10.4% y/y to EUR 120.1m due to the weak performance of consumer and exports segments. Driven by increased price competition, we expect softer gross margin to be the main driver of weak profitability, an EBIT of EUR 2.1m (1.8% margin), alongside decreased net sales.

HOLD with a target price of EUR 4.7
Verkkokauppa.com’s peer groups’ valuation levels have continued the trend of decline and we see the valuations as quite modest given their solid EPS growth expectations; online-focused peers are now trading with 22-23E P/E and EV/EBIT multiples of 14-12x and 14x-11x respectively while omnichannel peers trade with corresponding multiples of 11-10x and 12-10x respectively. Meanwhile, Verkkokauppa.com trades with 22-23E P/E and EV/EBIT multiples of 19-14x and 12-9x. With the current valuation elevated, we retain our HOLD-rating and TP of EUR 4.7 ahead of the Q1.

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Clear double-digit growth in expectations 
After great Q4’21, we expect DT to continue strong development in all its business segments: in our estimates, MBU’s Q1 growth pace smoothens (7.8%) due to low availability of components while we expect IBU (19.3%) and SBU (25.2%) to grow significantly from the comparison period. We expect IBU’s freshly won customers to generate new topline growth in Q1. SBU growth is mainly driven by the recovery of the aviation segment. Q1 group topline increases by 15% y/y to EUR 21.1m while EBIT also improves by 39% y/y, driven by increased net sales, amounting to EUR 1.9m (9.2% margin). 

MBU to suffer the most from the component shortage 
In its Q4 review, DT noted that underlying demand remains strong, but low component availability restricts growth, especially in the medical segment. In our understanding, the availability of components used in industrial and partly in security detectors isn’t as limited as in medical applications. In addition, the war in Ukraine and the sanctions set for Russia have affected to semiconductor sector through increased material and production costs. We, however, remain to wait for the company’s comments on its supply chain development before adjusting our estimates. 

HOLD with a target price of EUR 22.5 (26.0)
DT’s current valuation (22E EV/EBIT of 21x) appears quite elevated compared to its peers (22E EV/EBIT of 17x) due to DT’s yet soft profitability. We now focus on emphasizing DT’s 2023 potential as the current year’s development is restricted by bottlenecks of the global supply chain, which we expect to ease during 2023-24. With our new target price, 23E valuation drops near peer median with DT’s earnings improvement. With the current valuation stretched compared to peers, we retain our HOLD-rating and adjust our target price to EUR 22.5 (26.0).

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• The AGM approved the Board of Directors’ proposal to distribute a regular dividend of EUR 1.60 per share plus an extraordinary dividend of EUR 2.00 per share to be paid for the financial year 2021.
• At the same time, the AGM decided that new shares will be issued to the shareholders without payment in proportion to their holdings so that four new shares are issued for each share. In total, 32,519,336 new shares will be issued, increasing Marimekko’s total number of shares from 8.1m to 40.6m.
• Split has no effect on Marimekko’s fair value and hence we have made no changes to our estimates. We update our target price to EUR 15.8 (79) and retain HOLD-rating.
• Marimekko publishes its Q1 result on 13 May 2022.

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ESL’s market outlook remains very favorable for now

Aspo reinstated guidance after a month-long hiatus. The war necessitated its withdrawal as the CIS countries generated a combined EUR 155m in FY ’21 revenue for Telko and Leipurin. The situation causes uncertainty around their physical operations, while the acceleration in inflation poses both risks and opportunities for the raw material distribution businesses. ESL’s outlook has however remained favorable, and we continue to expect EUR 29.9m EBIT for this year. The dry bulk cargo market doesn’t seem to soften despite talks of Western stagflation. Cargo volume outlook still appears robust while freight rates are improving. In our view Aspo can now base its new EUR 27-34m EBIT guidance on ESL’s strength, while uncertainty lingers especially around Telko in Russia and Ukraine as well as the Leipurin Russian business.

We cut our Telko EBIT estimate by EUR 2.7m to EUR 7.4m

We revise our top line estimate for this year down from EUR 558m to EUR 541m. Our EBIT estimate is down to EUR 32.4m from EUR 35.5m, and we also make some downward revisions for the coming years, roughly to the tune of EUR 2m. It’s unclear how much further ESL’s performance can improve in the short to medium term, but the company continues to focus on its small vessel strategy as before and is set to receive the new hybrid vessels in the coming years. Telko and Leipurin have increasingly focused on Western markets in the past few years; the Russian challenges will organically hasten this development, and Telko is also likely to add some Western operations through M&A.

Telko could potentially drive upside later this year

Aspo is valued closer to 11x EV/EBIT on our FY ’22 estimates. Telko’s implied value remains low while ESL shoulders a major part of estimated EBIT this year. Aspo’s current valuation still reflects considerable caution and could turn out to be too low if Telko manages to perform better than expected in the coming few quarters. We believe the EUR 7m difference between the lower and upper points of the guidance range is mostly due to Telko. We retain our EUR 8 TP; our new rating is HOLD (BUY).

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H2 well in line with expectations
Administer reported H2 results well in line with expectations. Revenue grew 3.2% y/y to EUR 22.0m (Evli EUR 22.1m) driven by the acquisition of EmCe. EBITDA and EBIT amounted to EUR 1.7m and EUR 0.3m respectively (Evli EUR 1.6m/0.4m). Profitability was affected by the company’s investments into growth and technological development. With the net result affected by IPO related expenses and as such being clearly negative, the BoD proposed that no dividends be paid for FY 2021 (Evli EUR 0.00).

Seeking to clearly pick up growth
Administer reiterated the earlier communicated outlook for 2022, expecting revenue to grow to over EUR 51m and to achieve and EBITDA-margin of at least 8%. With the H2 results and the guidance corresponding to our expectations, along with no significant changes to our views on Administer’s potential, we make no notable changes to our estimates. We expect 2022 revenue of EUR 52.1m and an EBITDA-margin of 9.2%. Current estimate uncertainty mainly stems from growth expected to be driven by acquisitions, with Administer seeing 5-10 acquisitions being made during 2022. Near-term profitability improvements should mainly arise from a lesser impact of challenges faced during 2021, with expectations of measures to improve operational efficiency and synergies from acquisitions to start to show from 2023 onwards.

BUY-rating with a target price of EUR 4.7
With our views and estimates essentially intact we retain our BUY-rating and target price of EUR 4.7. On our estimates current valuation implies a 2022e EV/sales of 0.7x, which in our view does not account for the improvement potential, albeit we acknowledge that Administer has yet to prove its worth.

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• Net sales in H2 amounted to EUR 22.0m (EUR 21.3m in H2/20), in line with our estimates (Evli EUR 22.1m). Net sales in H2 grew 3.2% y/y. Growth was mainly attributable to the acquisition of EmCe.
• EBITDA and EBITA in H2 were EUR 1.7m (H2/20: EUR 2.9m) and EUR 1.3m (H2/20: EUR 2.6m) respectively, in line with our estimates (Evli EUR 1.6m/1.3m). The EBITA-margin amounted to 5.9%. Profitability was burdened by growth investments.
• Operating profit in H2 amounted to EUR 0.3m (EUR 2.2m in H2/20), in line with our estimates (Evli EUR 0.4m).
• During H2 Administer completed the acquisition of financial management software producer EmCe Solution Partner Oy and accounting firm Tilikamut Oy and its subsidiary Konnektor Oy. Administer has during Q1 announced two acquisitions, WaBuCo Financial Services Oy (2021 revenue EUR 0.9m) and the payroll services of Konjunktuuri Oy.
• Guidance for 2022: Administer expects that its net sales will increase to at least EUR 51m and the EBITDA-margin to be at least 8%. The company further expects to make 5-10 acquisitions over the course of 2022.
• Dividend proposal: Administer’s BoD proposes that no dividend be paid for FY 2021 (Evli EUR 0.00).

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Weak market and war behind the guidance revision
Verkkokauppa.com downgraded its FY’22 guidance from expecting revenue of EUR 590-640m and adj. EBIT of EUR 19-25m to revenue of EUR 530-590m and adj. EBIT of EUR 12-19m. The start of the year 2022 has been tough and consumer demand has been lacking in durable goods. Russia’s military attack on Ukraine has further decelerated consumer activity. Furthermore, Verkkokauppa.com decided to stop export deliveries to Russia which in 2021 represented roughly EUR 20m, half of the Exports segment’s sales. According to the company’s management, B2B segment has continued its good performance, and in our understanding, the geopolitical situation hasn’t affected the business. Softness in the Finnish consumer electronics market has also infected the demand for evolving product categories, but we expect the evolving categories to recover faster than the main categories. The component shortage has continued and is expected to impact on product availability throughout the year. The company’s management has indicated that possible material cost increases could be shifted to consumer prices. If the uncertainty diminishes during H1 or early H2’22 and consumer demand picks a bit up, the guidance is, in our view, quite cautious.

Normalization of the demand in H2’22 seems uncertain
Before the profit warning, we expected H1’22 to be tough and the demand to recover during H2’22, but now the recovery seems uncertain and H1’22 is clearly weaker than we and markets were expecting. A wide guidance range also indicates the uncertainty among Verkkokauppa.com’s management. In addition to uncertainty, low attractivity of consumer goods is also explained by consumer demand’s shift to services. Moreover, during the pandemic, consumers invested in expensive electronics devices that drove strong sales development in that time.

We made significant downgrades to our estimates
As a result of the profit warning, we have downgraded our estimates. With the exit of Russian exports, the company expects the Export segment not to recover during 2022. Given the fact that B2B has performed well during 2022, the hardest hit was taken by the consumer segment. Thus, we expect a double-digit decline both in consumer and exports segments while B2B is expected to grow strongly during H1’22. We expect consumer demand to start to recover during Q3 and the topline to get back on a clear growth bath in Q4’22. In Q1’22 we expect net sales to decline by 10.4% to EUR 120.1m, driven by weak consumer demand and the end of Russian exports. In our estimates, Q1 operating profit is weak, totaling EUR 2.1m (1.8% margin). Weaker profitability is driven by decreased revenue and a relatively weak gross margin. 2021 full-year estimates lands to bit over the midpoint of the guidance, revenue to EUR 565.1m and EBIT to EUR 15.8m (2.8% margin). During 2023-24E, we expect Verkkokauppa.com’s topline to grow by 7.6% and 8% respectively as well as the company to reach an EBIT margin of 3.4% and 3.8% respectively.

HOLD with a target price of EUR 4.7 (6.0)
Our 22E EBIT estimate was downgraded by some 28% and 22E EPS by some 24%, and we find significant pressure to downgrade our target price after the company’s profit warning. Currently, Verkkokauppa.com trades with 22-23E P/E multiples of 20-15x while with our current target price of EUR 6.0 the corresponding multiple is 23-17x. At the same time, the company’s omnichannel peers are valued with 22-23E P/E multiples of 11-10x, indicating that the company is valued with ~70% premium over its peers. We find it difficult to accept a premium of 70%, given weak market conditions and uncertain near future. However, with a dividend yield of ~5%, it’s reasonable to stay on the company’s ride. In addition, the annual EPS growth of 24% (CAGR 2022-25) is supporting the long-run return potential. Our new target price implies 22-23E P/E multiples of 18-14x which are still quite stretched compared to peer group median. We retain our HOLD-rating and adjust our target price to EUR 4.7 (6.0).

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Strong track record
Finnish online retailer Verkkokauppa.com has grown at a CAGR of 11.5% (2010-21). The company has positioned well to the megatrend of online transition with its most visited and known webstore among Finns. By expanding its presence in low online penetration categories, the company aims to tap market share from the original brick-and-mortar stores. With a low OPEX base, the company is committed to executing price-driven business in price-sensitive consumer electronics markets while improving its gross margin through evolving product categories. With a strong brand, local warehousing, and fast deliveries the company aims to expand its 150,000+ active customer base.

Strategy execution has started well
Verkkokauppa.com renewed its strategy in 2021 and expects to reach a revenue of EUR 1bn and 5% EBIT margin by 2025. In Feb 2022, Verkkokauppa.com acquired a Finnish webstore e-ville.com. With the acquisition, the company gets an experienced sourcing team and new resources to develop its own brands. Moreover, the automated warehouse is in a testing phase and is expected to operate by the end of Q1’22. We expect to see some enhancements in efficiency during H2’22 since, with the new automated warehouse, the utilization rate of the rental warehouse decreases, and efficiency improves in Jätkäsaari warehouse.

HOLD with a target price of 6.0 (6.5)
Verkkokauppa.com’s peers have also experienced a decline in valuation multiples. Omnichannel peer group median is valued with a 22-23E P/E of 12-11x while Verkkokauppa.com is trading at 15-13x. We find the premium justified, given stronger earnings growth expectations. Even though we don’t see the war affecting Verkkokauppa.com’s business directly yet, the uncertainty limits potential returns in the short-term. We retain our HOLD-rating and adjust our TP to 6.0 (6.5).

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No surprises in H2 results
Netum reported H2 results in line with our estimates. Revenue grew 33.4% (18.6% organic growth) EUR 12.0m (Evli EUR 11.9m) and EBITA amounted to EUR 3.1m (Evli EUR 3.1m, pre-announced). Growth was driven by successful recruitments and new customer acquisition and also to some extent by higher pricing levels. Netum’s BoD proposes a dividend of EUR 0.11 per share (Evli EUR 0.09). In 2022 the company expects revenue to grow by over 30% from 2021 and the EBITA-margin to be above 14%.

Expecting over 30% growth in 2022
Netum’s growth guidance is above our previous estimates (22%) and adjusted for the impact of the Cerion Solutions acquisition implies continued clear double-digit organic growth, which given the growth in headcount (2020: 130 -> 2021: 217) should be well achievable should the demand situation not deteriorate. On our revised estimates we expect revenue of EUR 29.6m (+32% y/y) and an EBITA-margin of 14.3%. Margins have been at good levels, and we see limited near-term upside apart from a potential slight boost from frontloaded recruitments converting to revenue and thus higher revenue/employee. Netum updated its strategy and financial targets, seeking revenue of EUR 50m by 2025, implying annual growth of over 20%. The company seeks to maintain an EBITA-margin of over 14%. Netum noted that it is looking into expansion in the Nordics/Baltics, which could help in achieving the growth target, but such a move would in our view unlikely be seen before 2024.

HOLD with a target price of EUR 4.3
Demand uncertainty has increased due to the on-going conflict and peer multiples have also seen some further depreciation from our previous update. With our raised growth estimates, however, we retain our TP of EUR 4.3, valuing Netum at 13.7x 2022e adj. P/E.

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• Netum’s net sales in H2 amounted to EUR 12.0m (EUR 9.0m in H2/20), in line with our estimates (Evli EUR 11.9m). Net sales in H1 grew 33.4% y/y, of which 18.6% was organic growth. 
• EBITDA in H2 was EUR 1.5m (EUR 1.7m in H2/20) and comparable EBITA EUR 1.5m (EUR 1.5m in H2/20) in line with our estimates of EUR 1.6m and 1.5m.
• Operating profit in H2 amounted to EUR 0.7m (EUR 0.5m in H2/20), slightly below our estimates (Evli EUR 1.0m), at a margin of 5.8%. 
• Comparable earnings per share was EUR 0.12 (H2/20: 0.12)
• Personnel at the end of the period amounted to 217 (130).
• Dividend proposal:  Netum’s BoD proposes a dividend of EUR 0.11 per share (Evli EUR 0.09). 
• Guidance for 2022: Netum expects its revenue to grow by at least 30% and the EBITA-margin to be over 14%.

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Seeking rapid and profitable M&A supported growth
Administer is one of the leading providers of financial management and HR & payroll services in Finland. Founded in 1985, the company has grown rapidly in recent years through acquisitions and today employs around 600 employees. Administer is in its strategy seeking to continue growth inorganically as well as boosting organic sales growth through investments into its sales organization and looking to clearly improve its profitability through growth, synergies from acquired companies and through enhancing the efficiency of own operations. The company targets revenue of EUR 84m and an EBITDA-margin of at least 24% in 2024.

Set to return to rapid growth in 2022
Administer’s recent financial performance has been affected by the pandemic, a loss of several larger customers in its subsidiary Adner and growth investments and reported figures have so far during 2021 declined y/y. A clear pick-up in growth is seen in 2022, aided by the acquisition of financial administration SaaS solutions provider EmCe, with profitability also set to recover with a reduction in the impact of previously noted challenges. The company’s growth and profitability potential is in our view considerable but the potential realization is still a long way away.

Initiate coverage with buy-rating and TP of EUR 4.7
We initiate coverage of Administer with a target price of EUR 4.7 and BUY-rating. In deriving our target price for Administer we rely mainly on peer multiples and further compile a scenario analysis to illustrate the impact the company’s financial targets, should they materialize, could have on the value. Our target price values Administer at 1.2x 2022e EV/sales and 16.6x 2022e EV/EBITA, near the lower end of peer multiples, which we currently consider fair as Administer’s financial performance is still quite clearly sub-par.

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The crisis affects Telko and Leipurin in various ways

Aspo withdrew guidance as the war in Ukraine and situation in Russia limit visibility. The uncertainty directly concerns Telko and Leipurin, while ESL ships only limited amounts of cargo from Russia and hence the situation affects the dry bulk business mostly indirectly. Russia and other CIS countries, including Ukraine, amounted to EUR 155m in FY ’21 Aspo revenue. Telko and Leipurin both distribute basic raw materials and have managed to navigate challenging market conditions before, but the full-scale war and dismal prospects for the Russian economy mean the hit is bound to be larger this time. Both companies are asset-light i.e. inventories and trade receivables constitute their assets. There is also no dependency on any large customer accounts. The Russian sanctions shouldn’t concern Leipurin that much as the company sources for the most part local raw materials; Telko is more vulnerable in this sense as it connects small local customers with Western principals.

We revise our FY ’22 EBIT estimate down by EUR 7.9m

We leave our FY ’22 estimates for ESL unchanged at this point, however we revise our revenue estimates for Telko and Leipurin down by a combined EUR 50m. In our view Leipurin will be especially affected by the Russian end-market challenges as the local consumers struggle with hyperinflation. The situation is a lot more unclear for Telko as e.g. elevated oil prices lift raw materials prices, which by itself should support margins. Our new FY ’22 EBIT estimate for Telko is EUR 10.1m (prev. EUR 16.8m) and EUR 1.1m for Leipurin (prev. EUR 2.3m). We note Telko also operates in 13 other countries besides Russia and Ukraine.

In our view Telko is now undervalued despite the risks

There are no very useful peer multiples as the strong global dry bulk earnings translate to multiples which we view too low to be applied to ESL. In our view ESL is worth close to EUR 350m, or some 11-12x EBIT. This would imply the current valuation puts very little value on Telko; there are risks, but the EUR 155m CIS revenue represents 41% of the FY ’21 combined Telko and Leipurin revenue. We thus view the recent sell-off somewhat overdone. Our new TP is EUR 8 (14); we retain our BUY rating.

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Others can’t make up the loss, at least in the short-term

The most acute uncertainty stems from the sanctions, including payment bans, and their effect on Russian deliveries. Russia was 39% of Raute’s FY ’21 order intake and 49% of revenue, an extension on the previous years’ similar high figures. Raute has in the past done good Russian business, without direct ruble exposure, despite the infamously stagnant economy. There are no other risk exposures, like major assets, other than the orders already booked. The Russian economy is to be decimated along with the ruble in the short and medium term while long term outlook remains grim with no historical precedent. Hyperinflation is imminent and many Russian customers will be unable to invest. We believe Raute’s Russian orders will begin to recover sometime in the future, but this may take long. In our view a recovery to previous levels might not happen very fast even with a more comprehensive regime and societal change, and such a scenario is on the rosy side. Other markets could help to shore up the loss of Russia, e.g. Europe has recently developed well, but at least some of the economic trouble may spill over.

We now downgrade only our Russian estimates

We have made changes only to our Russian revenue and order estimates. We previously estimated EUR 49m Russian order intake and EUR 79m revenue for this year. We cut these to respective EUR 14m and EUR 32m figures, noting a lot of uncertainty around the exact levels. It’s early to say much about how the crisis will affect Raute’s other customers, but Western stagflation is one prospect. We expect roughly break-even EBIT.

Potential is still high, but so is the present uncertainty

Raute’s valuation remained modest before the invasion as inflation was a major source of uncertainty. In our opinion no very useful peer multiples were available for Raute before the war, and this is now true even more so. Raute is valued ca. 6x EV/EBITDA and 9x EV/EBIT on our FY ’23 estimates, not challenging levels but the environment is extraordinary. Long-term potential is significant as Raute remains the leading player in its niche, however we consider the valuation neutral given the circumstances. Our new TP is EUR 15 (22); rating HOLD (BUY).

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No major surprises in connection with the report

Enersense’s Q4 top line declined by 3% y/y, mostly due to the sale of Staff Leasing business, to EUR 65.9m and was above our EUR 63.0m estimate. The revenue beat was largely due to International Operations, but Power was also above our estimates. Certain M&A related items, both positive and negative, affected results, but overall profitability was slightly above our estimates. Infections continued to bother in certain projects, however these are unlikely to be a major issue going forward. Long-term profitability improving investments in IT and offshore wind power business will burden results this year, and we revise our FY ’22 profitability estimates down by some EUR 3m.

Latest macro changes are more likely to be supportive

There is some inflation risk, especially in the Baltics as the local contracts are long, but the contracts tend to compensate for cost pressures as now seen to some extent in raw materials and wages. Enersense has expanded its value chain presence with two recent acquisitions, and these don’t involve any significant integration issues. Enersense will also update its long-term targets later in H1’22 (the current target is 10% EBITDA margin by 2025 whereas we estimate 7.3% margin for FY ’22). Offshore wind power is a major growth driver going forward as it is a relatively underdeveloped space compared to onshore. The latest shifts in geopolitics do not in our view pose significant risks for Enersense, rather they are bound to accelerate the European transfer away from hydrocarbons and major initiatives in e.g. Germany could yet play out favorably for Enersense’s strategy.

Valuation is not challenging in either short or long term

Our EUR 18.2m EBITDA estimate for FY ’22 lands a bit above the midpoint of the EUR 15-20m range, which we don’t view very challenging. The respective 5.5x EV/EBITDA and 12x EV/EBIT multiples aren’t high compared to peers, and valuation is even more attractive in the long-term perspective as Enersense should achieve relatively steep earnings growth. Peer multiples have, however, continued to decline in the past two months and we update our TP to EUR 8 (10). Our rating remains BUY.

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• Enersense Q4 revenue was EUR 65.9m vs our EUR 63.0m estimate. Smart Industry amounted to EUR 21.0m vs our EUR 21.5m estimate. Power was EUR 13.8m vs our EUR 12.5m estimate. Connectivity was EUR 13.2m, compared to our EUR 14.8m estimate, while International Operations was EUR 18.0m vs our EUR 14.2m estimate.
• Adjusted EBITDA landed at EUR 7.5m, compared to our EUR 7.4m estimate. Adjusted EBIT was EUR 5.8m vs our EUR 5.1m estimate. Smart Industry EBITDA amounted to EUR 6.6m, while Power EBITDA was EUR 0.0m. Connectivity was EUR 0.7m and International Operations was EUR 0.3m.
• Order backlog was EUR 291m at the end of Q4 (EUR 292m a year ago).
• Enersense guides FY ’22 revenue to be between EUR 245-265m (vs our EUR 247m estimate) and adjusted EBITDA EUR 15-20m (vs our EUR 21.0m estimate). Investments in the new ERP system as well as in growing offshore wind power will burden results.
• The BoD proposes EUR 0.1 per share dividend to be distributed, compared to our EUR 0 estimate.

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Limited production with new challenges at Friday
Endomines reported weaker than expected results. At the company’s only producing site (in Q4/21), Friday, mining operations were halted due to irregularities in the ore bodies. Gold production as such was limited, at 460oz, with earlier guidance of ~1,200oz. Revenue amounted to SEK 3.2m (Evli SEK 17.3m) and EBITDA to SEK -41.6m (Evli SEK -28.0m). Due to the developments at Friday Endomines carried out impairments of SEK 73.8m and EBIT was thus also clearly below expectations, at SEK -121m (Evli SEK -33.7m).

Assuming renewed ramp-up at Friday in mid-2022
The halting of mining operations at Friday is unfortunately timed, as most preparations for achieving full production capacity has been set in place. With the needed underground drilling and analysis we for now assume a six month delay, seeing renewed ramp-up efforts during the summer. News on Pampalo were far more encouraging, with development so far essentially on schedule and budget and first gold concentrate deliveries in January. The Pampalo mine and mill are expected to achieve full production capacity during Q1/2022. When in full production, the annual gold production is estimated to be between 10,000-11,500oz. Endomines has considerably strengthened its financial position through several transactions after Q4. Cash flows from Pampalo will also begin to support financial development, with gold prices at renewed higher levels. In our view additional financing needs are however still on the table, as the company on the longer run will seek to bring more assets to production.

HOLD with a target price of SEK 2.3 (2.7)
Following adjustments to our SOTP-model and the delay at Friday we adjust our target price to SEK 2.3 (2.7) and retain our HOLD-rating. With the challenges at Friday, upside potential from bringing other assets to production is still distant.

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• Revenue in Q4 amounted to SEK 3.2*m, below our estimate of SEK 17.3m. The company fell short of its earlier production guidance of around 1,200oz, with production of 460.3oz, at a head grade of 2.89g/t.
• EBITDA in Q4 was at SEK -41.6m*, below our estimate of SEK -28.0m given the lower revenue.
• EBIT in Q4 amounted to SEK -121.4m* (Evli SEK -33.7m), including larger write-downs on the Friday project.
  *Figures derived from Q1-Q3 and H1 figures
• During Q4, at Pampalo, ore production from the mine reached mine development started. The decline reached target levels in September. The mill was refurbished and tested in December and the first concentrate was delivered in January.
• Ramp up and ore processing continued at Friday. Ramp up was delayed by a need to conduct underground definition drilling due to ore irregularities. The production guidance for 2022 is as such under review and can be updated once new resource estimates have been completed.
• Production guidance for 2022: The Pampalo mine and mill are expected to reach full production capacity during Q1/22. When in full production the annual gold production is expected to be 10,000 to 11,500oz. The production guidance for Friday is under review.

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Not many surprises in Q4 figures

Q4 NRI, at EUR 20.4m, topped the EUR 19.5m/19.7m Evli/cons. estimates. Operating income was EUR 18.7m vs our EUR 18.2m as there were EUR 0.1m in one-off admin costs. Not all deals closed by Cibus in Q4 were in our estimates, and this seems to have been the case also for the consensus, yet the report never held much potential for surprise as is always the case with Cibus.

We expect Cibus to be able to source and finance the deals

Cibus’ growth target for 2022-23 states the company is to add EUR 1.0-1.5bn in properties over the two years. Cibus seeks an IG credit rating and thus a new share class (D) is to be instituted. Two recent issues have already helped net LTV down a bit, but according to Cibus the ratio should further decline to around 50%. We calculate the targets to imply EUR 600-850m in equity issues. The sums are considerable, but we believe Cibus will be able to source the properties without bidding too high as the company’s current position in Finland, by far its biggest presence, amounts to no more than 10% of the market. Denmark is an obvious candidate for expansion as the country has a lot of small grocery stores and is in that sense comparable to Norway. Cibus sees some yield compression in Sweden, but Finnish yields appear to lag the Nordic market as the levels are still around 6% while they are closer to 5% in the other three countries.

Valuation continues to reflect underlying yield compression

In our view Cibus’ valuation has reflected yield compression expectations for a while now. We don’t see the current 1.2x EV/GAV too high if yield compression supports asset values going forward. Cibus traded around 1.4x EV/GAV in late December and the yield almost touched those of other listed Nordic property portfolios. Such a level yield wouldn’t by itself be too problematic for future returns, but in our opinion the 1.4x EV/GAV would be on the aggressive side considering properties’ inherent limited upside potential. Cibus’ portfolio performance is very stable, however the premium valuation combined with relatively high LTV means equity is sensitive to different assumptions. We retain our SEK 215 TP and HOLD rating.

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H2 burdened by merger related non-recurring items
Fellow Finance’s H2 results fell short of our estimates, as interest income declined more than expected, causing a slight y/y revenue decline to EUR 5.2m (Evli EUR 5.8m). Fee income grew some 35% on a 59% increase in brokered financing. EBIT amounted to EUR -1.4m (Evli EUR -0.5m), with non-recurring items relating to the intended merger larger than expected along with an increase in personnel expenses. Fellow Finance’s BoD proposed that no dividend be distributed, and the company gave no guidance due to the merger.

Still sub-par but showing promising signs
In its current form Fellow Finance as a company is showing quite notable signs of improvement. The growth in brokered financing during 2021 is now also starting to show as revenue growth and the anticipated lower levels of interest income are to a larger extent offset by a decline in impairment losses and interest income from external debt, reducing the impact on profitability. We have still substantially lowered our estimates for 2022, anticipating some further non-recurring expenses and the increase in personnel expenses along with the lower interest income levels to impact on profitability. Fellow Finance anticipates formalizing the merger with the company carrying on Evli Bank’s banking operations on April 2nd, 2022. We continue to see the transaction in favourable light due to the potential in profitability gains from moving towards balance sheet lending.

BUY with a target price of EUR 3.3 (3.5)
Fellow Finance’s current valuation level is challenging and relies upon the potential benefits from the merger. The implied current valuation of Fellow Bank of near EUR 50m would indicate a P/B of below 1.5x. We lower our target price to EUR 3.3 (3.5) and retain our BUY-rating

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• Q4 rental income amounted to EUR 21.6m, compared to the EUR 20.7m/20.8m Evli/consensus estimates.
• Net rental income landed at EUR 20.4m vs the EUR 19.5m/19.7m Evli/consensus estimates.
• Operating income was EUR 18.7m vs our EUR 18.2m estimate.
• Net operating income came in at EUR 12.8m, compared to the EUR 12.5m/12.7m Evli/consensus estimates.
• Annual net rental income capacity was EUR 85.8m at the end of Q4.
• GAV amounted to EUR 1,500m while EPRA NAV was EUR 13.5 (12.4) per share.
• Net LTV ratio stood at 57.8% (60.1%).
• Occupancy rate was 94.4% (94.2%).
• WAULT was 5.0 years at the end of Q4.
• Annual total dividend per share is proposed at EUR 0.99, compared to the EUR 0.99/0.99 Evli/consensus estimates.

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• Revenue in H2 amounted to EUR 5.2m (EUR 5.3m in H2/20), below our estimates (Evli EUR 5.8m). Revenue declined 1.4% y/y. The amount of brokered financing during H2/21 grew 59% y/y while fee income grew 35%. Interest income decreased clearly more than expected to EUR 1.2m (H2/20: EUR 2.3m) vs. our expectation of EUR 2.1m.
• Fellow Finance facilitated loans during H2 for a total of EUR 142.3m (EUR 84.3m in H2/20), growing 59%. Loan volumes continued on a good growth track also in H2, as seen throughout 2021, with volumes passing the EUR 20m mark on a monthly basis during the last months of 2021.
• The EBIT in H2 amounted to EUR -1.4m (EUR 0.8m in H2/20), below our estimates (Evli EUR -0.5m). Profitability was burdened by one-off expenses relating to the intended merger and a growth in personnel expenses. Without the non-recurring items, the result for 2021 would have been slightly positive.
• The EPS in H2 amounted to EUR -0.23 per share (EUR 0.02 in H2/20), below our estimate of EUR -0.12.
• Dividend proposal: The BoD proposes that no dividends be paid for FY2021 (Evli EUR 0.0).
• Guidance for 2022: Due to the significant changes in Fellow Finance’s business after the merger, the company does not currently provide a guidance.

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High growth due to volumes and component inflation

The EUR 192m Q4 revenue, up 24.5% y/y, topped the EUR 183m/185m Evli/cons. estimates by a fair margin. The EUR 14.4m in spot purchases were spread even between the five segments, relative to their sizes. Energy & Cleantech grew the most also in Q4. It was known before that Q4 would fall short of Scanfil’s EBIT potential as component issues and infections limited productivity, but the EUR 10.2m adj. EBIT was a bit above the EUR 9.7m/9.6m Evli/cons. estimates. The Q4 issues are by their nature temporary; in our view Scanfil’s guidance and comments suggest the situation is improving, or at least has stabilized.

Performance is set to improve this year and beyond

All the segments grew last year. We expect Energy & Cleantech to contribute most growth this year as the segment benefits from many megatrends and includes customers such as TOMRA. Inventories grew EUR 90m last year due to high demand but also in response to the component challenges. Scanfil suggests spot purchases may be lower again in H2’22; we estimate margin improvement throughout the year. Scanfil mentioned possible expansion in Asia beyond China, and this would be likely in countries such as India, Vietnam, and Malaysia. In our view such an expansion would be more likely through M&A than greenfield. Scanfil has recently announced expansions to its plants in the US and Germany, and hence capex will be a bit above 2% of revenue this year. An expansion to the Suzhou plant might also follow.

Multiples have declined, favorable outlook is much intact

We make only marginal estimate revisions. Scanfil is valued 6.0-7.5x EV/EBITDA and 8.0-9.5x EV/EBIT on our FY ’22-23 estimates. In our view the medium to long-term demand and earnings outlook hasn’t changed much in the past 3-6 months, while valuation has declined by 15-20% (peer valuations have declined by roughly similar percentages). Scanfil’s multiples are now well in line with peers, but in our view a premium can be justified by the fact that Scanfil’s EBIT outlook remains somewhat higher than that of a typical peer. We revise our TP to EUR 8 (9) as the sector’s valuations have declined, but our rating remains BUY.

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• Scanfil Q4 revenue grew by 24.5% y/y to EUR 191.7m, compared to the EUR 182.5m/184.8m Evli/consensus estimates.
• Advanced Consumer Applications was EUR 52.9m vs our EUR 54.6m estimate, while Energy & Cleantech amounted to EUR 53.4m vs our EUR 47.1m estimate. Automation & Safety landed at EUR 41.1m, compared to our EUR 39.4m estimate.
• Adjusted EBIT landed at EUR 10.2m vs the EUR 9.7m/9.6m Evli/consensus estimates. Adjusted EBIT margin was 5.3% vs our 5.3% estimate.
• Scanfil guides FY ’22 revenue to be EUR 710-760m and adjusted EBIT of EUR 43-48m. The respective consensus estimates for the year stand at EUR 718.6m and EUR 45.3m. Semiconductor availability, pricing, and supply chain functioning, as well as the pandemic, continue to pose uncertainty.
• Scanfil’s (updated) long-term target is to grow at a 5-7% organic CAGR and to reach 7% EBIT margin, in addition to paying a growing amount of dividend to the tune of a third of EPS.
• The BoD proposes EUR 0.19 per share dividend to be distributed, compared to the EUR 0.18/0.19 Evli/consensus estimates.

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We view the Q4 cost challenge as a temporary issue

Pihlajalinna’s top line grew at a 13% y/y rate. The EUR 155m figure was well in line with the EUR 156m/152m Evli/cons. estimates. Covid-19 services still amounted to a high EUR 10.1m, only a small q/q decline, but the level is set to fade this year. Q4 EBIT was hit by a spike in specialized care costs within complete outsourcing contracts, induced by Covid-19, and the effect amounted to some EUR 2m. The EUR 6.0m adj. EBIT therefore didn’t meet the EUR 9.2m/8.8m Evli/cons. estimates. Pihlajalinna has been negotiating for compensation for increased production costs before and expects to get favorable outcomes this year.

Growth and profitability targets set the bar high

Pohjola Hospital’s FY ’21 figures improved a bit, but EBIT was still EUR 7m red. Pihlajalinna sees EUR 5m in cost synergies and expects break-even during the year; H1 is still soft but H2 could already show results. The acquisition drives growth within private and insurance customers and thus helps margins as these areas are more profitable than public ones. Pihlajalinna revised its long-term financial targets accordingly: the new aim is above 9% EBITA margin and EUR 250m more revenue by the end of 2025 (compared to 2021), which in our view implies ca. 7.5% CAGR for the three years following the closing of the acquisition. Two thirds of the growth is to stem from corporate and private customers, segments where the acquisition is to prove useful. The profitability target can be seen as a small positive revision on the previous one; it will take some time for Pihlajalinna to reach that level, but we estimate by inferring from the guidance that Pihlajalinna could reach 7.5% EBITA margin already in H2’22. The company targets 4-6% margins within outsourcing, while other areas aim for levels comparable with those of Terveystalo.

Overall valuation picture hasn’t been altered

The acquisition limits profitability in H1’22, but Pihlajalinna is valued only around 6-8x EV/EBITDA and 12-18x EV/EBIT on our FY ’22-23 estimates. The multiples represent discounts to peers while our estimates remain moderate relative to long-term potential. We retain our EUR 14 TP and BUY rating.

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Growth was strong, but increased costs tightened margins
Vaisala delivered strong Q4 figures with orders received totaling EUR 119m and order book at a record level of EUR 160m. Strong order intake was driven by IM, while W&E experience a 14% decline partly due to strong comparison figures. Group net sales grew by 17% y/y to EUR 125 driven by both BUs. IM grew by 26% y/y, driven by all its market segments. W&E experienced a 12% increase in net sales, driven by renewable energy and meteorology. Increased usage of spot-priced components decreased the gross margin to 53%. EBIT decreased by 3% y/y to EUR 11.9m, driven by lower gross margin and increased fixed costs. Q4 EBIT included one-time costs worth EUR 1.1m. EPS declined by 11% y/y to EUR 0.21. Board proposed a dividend of EUR 0.68. Despite losing some margins, Vaisala gained market share and “long-wanted” customers from its competitors with its ability to respond to the demand in a difficult environment.

We made some adjustments to our estimates
Despite the problems on the supply side, the underlying demand remains strong. We made minor adjustments to our estimates, reflecting a solid outlook, but also risks stemming from the component shortage. The order book is strong and thus we expect both BUs to grow also during 2022. We expect IM to grow by 16% y/y to EUR 209.8m in 2022, driven by all its market segments. In 2022, we estimate W&E to increase by 6.3% y/y to EUR 273.1m, mostly driven by renewable energy. 2022 group revenue amounts to EUR 482.9m, near the mid-point of the guidance. Vaisala’s management noted that some price increases have been made in Q1’22, but the visibility to component availability remains weak and we expect material costs to increase and gross margin to be a bit lower than in 2021. In our view, IM suffers less from the component shortage with its pricing power, while W&E’s gross margin falls more aggressively. Although the gross margin is a bit softer, we expect EBIT to rise to EUR 59.9m (12.4% margin), driven by scalability. IM contributes the EBIT with EUR 52.4m and W&E with EUR 9m.

HOLD with a TP of EUR 41 (43)
Vaisala’s valuation is quite stretched compared to its peers. With 22E EV/EBITDA of 19x, Vaisala trades with a ~20% premium. We, however, find a premium justified, given Vaisala’s technology leadership, increased market share, and growth outlook. Our new TP values Vaisala at 22-23E EV/EBITDA of 17.6-16.4x. With the acceptable valuation level decreased and uncertainties in component availability, we retain our HOLD rating and adjust our target price to EUR 41 (43).

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Growth on track but investments burdened profitability
Solteq reported weaker Q4 results on the profitability side while growth still remained at a good pace. Revenue grew 11.4% to EUR 18.3m (EUR 18.0m Evli) and the operating profit amounted to EUR 1.3m (EUR 2.0m Evli). Compared with our estimates, profitability was weaker in Solteq Software, where adj. EBIT fell to EUR 0.0m (EUR 0.8m Evli). Profitability was impacted by growth investments as well as increases in subcontracting and general costs. Investments were made into software development and into international growth. Solteq’s BoD proposes a dividend of EUR 0.10 per share (EUR 0.11 Evli).

Estimates lowered as investments pick up
Solteq expects its revenue in 2022 to grow clearly and operating profit to improve compared with 2021. We have not made any significant changes to our revenue estimates but have lowered our profitability estimates by quite a bit, now expecting 2022 operating profit of EUR 7.8m (prev. 10.5m). Although it is unfortunate that profitability scaling in Solteq Software is not going as fast as we (in retrospect probably overoptimistically) had expected, prioritizing growth is still more beneficial with demand drivers in place and apart from cost growth from subcontracting the operational profitability still appears to be on track. We expect to see the growth investments weighing more heavily on H1 and with pick-up in growth and recurring revenue we expect to see figures improve towards the end of the year, creating good potential for the following years.

BUY-rating with a target price of EUR 5.0 (6.2)
With our estimates revisions we adjust our target price to EUR 5.0 (6.2), valuing Solteq at approx. 21x 2022e P/E. Solteq has likely been somewhat cautious in its profitability guidance, and we still see potential for some improvement during the year as visibility improves. We retain our BUY-rating.

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• Group results: Orders received was EUR 119.0m (+6% y/y) and order book totaled EUR 160.0m (+16% y/y). Net sales grew by 17% y/y to EUR 125m (125.5/123.5m Evli/cons.). EBIT decreased by -2.5% y/y to EUR 11.9m (16.4/16.8m Evli/cons.). Driven by soft EBIT the EPS was EUR 0.21 (0.39/0.40 Evli/cons.).
• Industrial Measurements (IM): Orders received grew very strongly by 42% y/y to EUR 58.2m and order book was at record level EUR 32.9m (+83% y/y) after Q4. Revenue grew strongly by 26% y/y to EUR 50.1m (49.5/49.5m Evli/cons.). Revenue growth was driven by high-end industrial measurements, life science, liquid measurements, and power. More expensive components bought from spots markets (negative impact of 4%-p.) drove down the gross margin to 59.9% (prev. 63.3%).
• Weather & Environment (W&E): Orders received declined by 14% y/y to EUR 60.8m and order book was at EUR 127.1m (+6% y/y). Net sales grew by 12% y/y to EUR 74.9m (76/74m Evli/cons.). Revenue grew in renewable energy and meteorology, while it was flat in aviation and transportation. Gross margin declined to 48.9% (prev. 51.1%) due to higher component prices (negative impact of 2%-p.).
• 2022 guidance: Net sales between EUR 465-495m (2021: EUR 437.9m) and EBIT EUR 55-70m (2021: EUR 50.1m).
• Dividend proposal: EUR 0.68 (0.63/0.64 Evli/cons.)
• Market outlook: Markets for high-end industrial instruments, life science, power industry, and liquid measurements are expected to grow. Markets for meteorology and ground transportation are expected to be stable. Aviation market is expected to recover towards pre-pandemic level. Renewable energy market is expected to grow.

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Positives, negatives, and one-off gains
Eltel’s Q4 revenue, at EUR 226m, topped the EUR 206m/207m Evli/cons. estimates while EBITA came in ca. EUR 2m above estimates. Finland performed much according to our expectations while Sweden topped our estimates; Norway and Denmark were a bit soft. The EUR 2.5m positive one-off in Poland, due to a real estate sale, drove the Other business segment to an EBITA of EUR 1.7m, clearly above our estimates even when excluding the one-off. Eltel’s earnings were, however, much in line with our estimates when adjusted for the one-off. Eltel’s turnaround continues and the company guides increasing operative EBITA margin for FY ’22. Q1, as happens to be the nature of the business, will represent a slow start for the year.

We now estimate a positive rate of growth for the year
Eltel continues to make progress, but there remains much uncertainty with respect to the gradient. Diesel prices, salaries, materials as well as logistics costs are headwinds. Inflation isn’t a problem for the Communication business (more than 60% of revenue), yet it affects Power. We make relatively small estimate revisions, but we now expect Eltel to reach a positive 2% growth this year, whereas we previously expected a 2% decline. Our new FY ‘22 revenue estimate is EUR 829.6m (prev. EUR 774.0m). Our margin estimates are up by only 10bps for the year, but they rise by some EUR 2m in absolute terms due to the growth revision. We however expect Q1 EBITA to remain slightly in the red and see most of the profitability gains accruing over the summer. We believe Eltel is still going to focus on turnaround for a while and thus e.g. M&A may have to wait for a while, but should it occur Denmark and Sweden are perhaps the most potential countries.

Valuation continues to stand neutral
Valuation still doesn’t seem to offer clear upside considering the uncertainty around the improvement pace. We find the 6x EV/EBITDA and 15x EV/EBIT multiples, on our FY ’22 estimates, to be neutral relative to peers. Eltel’s margins remain modest compared to peers; quicker than expected improvement can drive upside, but we wouldn’t expect much more than EUR 22m EBITA at this point. Our TP is now SEK 15 (17); retain HOLD.

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The Q4 report didn’t deliver any major surprises

Finnair’s Q4 revenue grew to EUR 414m, compared to the EUR 452m/387m Evli/cons. estimates. Adj. EBIT landed at EUR -65m vs the EUR -95m/-90m Evli/cons. estimates. Q4 cargo revenue was very high, but Q1 losses are likely to be well above EUR 100m due to Omicron and ramp-up costs. Finnair sees some delay to the opening of most of Asia, which was to be expected.

The whole airline industry is staging rebound this year

Omicron doesn’t seem to be a major negative, only a short-term issue, but losses still loom in Q2. Meanwhile Finnair implements a EUR 200m investment in improved long-haul experience with refitted seats, and we also expect Finnair’s fixed costs savings will continue to come through; inflation relating to e.g. Helsinki airport charges is modest compared to those of larger hubs. Finnair’s long-term profitability potential is no worse considering the fleet renewal and cost positioning, but high jet fuel prices continue to limit the whole industry’s profitability potential.

Valuations continue to reflect surging earnings levels

We believe other airlines’ valuations will continue to drive Finnair’s multiples: Finnair’s profitability will materialize later due to the Asian reliance, but it will nevertheless come through at a certain level. In our view the most essential uncertainty, for Finnair as well as other airlines, now lingers around overall operating cost levels, particularly with respect to jet fuel prices. Higher ticket prices could compensate, but we view such increases still to be uncertain. Air traffic will continue to rebound across the globe, including Asia as well, and is set to reach the pre-pandemic levels sooner or later. We estimate Finnair’s FY ’22 EBIT is most likely to remain in the red, while some other airlines should be able to reach high profitability this year. We believe the anticipation and materialization of these profits will determine Finnair’s valuation over the course of this year. In our view Finnair’s current valuation, ca. 12x EV/EBIT on our FY ’23 estimates, is somewhat neutral relative to other airlines, however overall sector valuations may still stand on the optimistic side. We retain our EUR 0.60 TP; our rating is now HOLD (SELL).

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Challenging last quarter of 2021
Innofactor’s Q4 results fell well short of our estimates, as the company faced challenges with the organizational changes in Finland and employee turnover. Net sales amounted to EUR 17.5m (Evli EUR 18.6m), declining 4% y/y but in comparable terms on par with Q4/20. EBITDA was EUR 1.7m (EUR 2.6m Evli), falling from the Q4/20 adj. EBITDA level of EUR 2.6m. Profitability was effectively down solely due to the challenges noted, although EBIT included larger one-off amortizations. The order backlog was at EUR 72.8m, up 20.6% y/y.

Poised to improve but some concerns remain
Innofactor expects its revenue in 2022 to increase from 2021 while EBITDA is expected to increase from EUR 7.5m, which would have been 2021 EBITDA without proceeds from the Prime business divestment. We have lowered our estimates for 2022, now expecting net sales of EUR 69.0m (prev. EUR 70.1m) and EBITDA of EUR 8.1m (prev. 9.5m). The organizational changes were started during Q3 and should impact to a clearly lesser extent going forward and the employee turnover appears to have peaked in Q3, which led to a spillover in Q4. The situation was more towards the normal in Q4 and the headcount began to grow, but the recruitment market has however been challenging for a while and we see this as a continued concern. Fundamentally Innofactor is in our view in a good position to post improved profitability figures in 2022, with all countries also having posted clearly positive EBITDA figures in Q4.

BUY-rating with a target price of EUR 1.6 (2.1)
On our revised estimates and some uncertainty going into 2022 we cut our TP to EUR 1.6 (2.1), valuing Innofactor at approx. 17x 2022 P/E. We see reasonable potential for higher than estimated profitability with the good order backlog levels should challenges not persist. We retain our BUY-rating.

Open report

• Q4 revenue grew by 12.8% y/y to EUR 154.7m, compared to the EUR 156.4m/152.1m Evli/consensus estimates. Private customer revenue was EUR 23.3m vs the EUR 26.4m/24.2m Evli/consensus estimates, while corporate customers contributed EUR 38.8m vs the EUR 40.8m/37.3m Evli/consensus estimates. Public sector customers were EUR 111.3m, compared to the EUR 107.2m/108.9m Evli/consensus estimates.
• Covid-19 services amounted to EUR 10.1m.
• Adjusted EBITDA landed at EUR 14.9m vs the EUR 18.0m/17.5m Evli/consensus estimates. Adjusted EBIT was EUR 6.0m, compared to the EUR 9.2m/8.8m Evli/consensus estimates. Higher costs within total outsourcing arrangements weighed down profitability. Negotiations concerning cost compensation had not produced desired outcomes by the end of the year. Pihlajalinna continues to negotiate with certain municipal clients.
• Pihlajalinna expects FY ’22 revenue to increase substantially and adjusted EBITA to stay level. The integration of Pohjola Hospital means H1’22 profitability will be below that of the previous year. The acquisition will increase revenue by at least EUR 50m in FY ’22. Covid-19 services revenue is expected to decline.
• The BoD proposes EUR 0.30 per share dividend to be distributed, compared to the EUR 0.35/0.31 Evli/consensus estimates.

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• Q4 revenue grew by 305.5% y/y and amounted to EUR 413.5m, compared to the EUR 451.9m/387.4m Evli/consensus estimates.
• Adjusted EBIT was EUR -65.2m vs the EUR -94.6/-90.1m Evli/consensus estimates.
• Fuel costs were EUR 102m vs our EUR 126m estimate. Staff costs amounted to EUR 84m, compared to our EUR 95m estimate. All other OPEX+D&A amounted to EUR 305m vs our EUR 340m estimate.
• Cost per Available Seat Kilometer was 7.75 eurocents vs our estimate of 8.84 eurocents.
• Finnair sees Q1 losses due to Omicron notable but short-lived and as a result, in addition to increased fuel prices and incremental costs caused by the need to ramp up capacity for summer 2022, expects Q1’22 losses to be of a similar magnitude as in Q1’21 (EUR -143m in terms of EBIT). Finnair reiterates its previous estimate that the losses will continue during the entire H1’22. There’s prolonged uncertainty with respect to the opening of China and Hong Kong, while countries such as Japan and South Korea should open towards the end of Q2’22.
• The EUR 200m cost savings programme’s full run-rate impact will be visible this year.

Open report

• Eltel Q4 revenue landed at EUR 226.3m vs the EUR 206.1m/207.0m Evli/consensus estimates, a decrease of 1% y/y.
• EBITDA came in at EUR 14.5m, compared to the EUR 13.2m/13.4m Evli/consensus estimates. Operative EBITA was EUR 7.0m vs our EUR 4.8m estimate, meaning operative EBITA margin was 3.1% vs our 2.3% estimate, while EBIT amounted to EUR 6.9m vs the EUR 4.6m/4.9m Evli/consensus estimates. The results were a positive surprise especially considering record-high sick leave rates as well as further project postponements which were caused by the pandemic. The current winter environment in the Nordics, however, will negatively affect Q1 results.
• Profitability in Finland remained strong while Sweden was able to reach a positive result (operative EBITA margin was 1.4% vs our 0% estimate). Norway’s profitability was still decent while Denmark declined to a low 0.6% operative EBITA margin. Denmark’s decline was mainly due to a 35% y/y drop in revenue. Finnish top line declined a bit while Sweden and Norway both grew.
• Eltel guides FY ’22 operative EBITA margin to increase.
• The BoD proposes no dividend to be paid for the year.

Open report

• Net sales in Q4 amounted to EUR 17.5m (EUR 18.3m in Q4/20), below our estimates (Evli EUR 18.6m). Net sales in Q4 declined 4.0% y/y but organically on par with Q4/20. Net sales increased in Norway and Denmark but decreased in Finland and Sweden.
• EBITDA in Q4 was EUR 1.7m (EUR 1.6m in Q4/20), below our estimates (Evli EUR 2.6m), at a margin of 9.5%. EBITDA was positive by a clear margin in all operating countries.
• Operating profit in Q4 amounted to EUR 0.5m (EUR 0.4m in Q4/20), clearly below our estimates (Evli EUR 1.8m), at a margin of 3.0%.
• Order backlog at EUR 72.3m, up 31% y/y. Innofactor received several significant orders in Q4, for instance a EUR 1.2m contract with a large Finnish manufacturing industry company.
• Guidance for 2022: Innofactor’s net sales is expected to increase from 2021 (EUR 66.4m) and EBITDA is expected to increase from EUR 7.5m, which would have been EBITDA without the proceeds of EUR 2.6m from the sale of the Prime business.
• Dividend proposal: Innofactor’s BoD proposes a dividend of EUR 0.08 per share (Evli EUR 0.06).

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• Net sales in Q4 were EUR 18.3m (EUR 16.4m in Q4/20), in line with our estimates (Evli EUR 18.0m). Growth in Q4 amounted to 11.4% y/y, of which the larger part was organic growth.
• The operating profit and adj. operating profit in Q3 amounted to EUR 1.3m and 1.4m respectively (EUR 1.8m/2.0m in Q4/20), below our estimates (Evli EUR 2.0/2.0m). Solteq Software’s profitability was below expectations due to investments into product development and internationalization.
• Solteq Digital: revenue in Q4 amounted to EUR 11.7m (Q4/20: EUR 10.6m) vs. Evli EUR 11.4m. Growth amounted to 10.3%. The adj. EBIT was EUR 1.4m (Q4/20: EUR 0.9m) vs. Evli EUR 1.2m. Demand in key areas, such as digital business and commerce solutions, is expected to remain good during 2022.
• Solteq Software: Revenue in Q4 amounted to EUR 6.6m (Q4/20: EUR 5.8m) vs. Evli EUR 6.6m. The adj. EBIT was EUR 0.0m (Q4/20: EUR 1.1m) vs. Evli EUR 0.8m. Growth was 13.3%. The business outlook is expected to remain positive.
• Guidance for 2022: group revenue is expected to grow clearly and operating profit to improve.
• Dividend proposal: Solteq’s BoD proposes a dividend of EUR 0.10 per share (Evli EUR 0.11).

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Q4 adj. EBIT was very high, outlook still favorable for H1’22

Aspo Q4 revenue grew by 27% y/y to EUR 160m, somewhat above the EUR 153m/148m Evli/cons. estimates. The EUR 13.9m adj. EBIT was clearly above the EUR 10.8m estimates. Aspo’s H2’21 involved, in essence, a couple of positive profit warnings as there were a few impairment losses which burdened the headline EBIT. The cargo market situation was well-known and hence another record ESL EBIT was in the cards; we expect some long-term pressure on the 16.5% ESL H2 EBIT margin, although based on Aspo’s comments there shouldn’t be any imminent negative factors. Forest, steel, and energy industries continue to drive robust cargo volumes also in H1’22. Telko’s EBIT was a bit soft relative to our estimate but still amounted to a very decent 6% margin. Leipurin recorded an impairment loss of EUR 4.3m, but other than that the results were much as we expected.

We estimate EBIT well above EUR 40m in the coming years

The spot market for large vessels has slipped a bit from the recent tops, yet ESL’s focus means results should be resilient even in the face of a marked drop. The geopolitical tensions, should they happen to escalate, would cast some uncertainty around the short-term performance of Telko and Leipurin, but in our view any major long-term adverse effects would be unlikely given the fact that both have a history of operating in challenging Eastern European countries. In our opinion the flat EBIT guidance appears conservative, especially considering the relatively undemanding H1’21 comparison figures and the fact that ESL’s strong H2’21 performance should extend itself well this year. We make only minor estimate revisions; our new FY ’22 EBIT estimate is EUR 43.4m (prev. EUR 42.4m).

Modest multiples given the guidance and LT positioning

We find Aspo’s current valuation level undemanding, not much more than 6x EV/EBITDA and 10x EV/EBIT on our FY ’22 estimates, especially when we view a positive profit warning much more likely than a negative one. We believe ESL can well beat our estimates and our 5.8% EBIT estimate for Telko isn’t that high either. We retain our EUR 14 TP and BUY rating.

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• Aspo Q4 revenue amounted to EUR 160.0m, compared to the EUR 153.2m/148.1m Evli/consensus estimates. EBIT, including Kauko, landed at EUR 8.8m vs the EUR 10.8m/10.8m Evli/consensus estimates.
• ESL Q4 revenue was EUR 54.7m vs our EUR 49.3m estimate, while EBIT came in at EUR 9.8m vs our EUR 6.5m estimate.
• Telko’s revenue amounted to EUR 73.6m, compared to our EUR 74.5m estimate. EBIT was EUR 4.4m vs our EUR 5.1m estimate. Telko’s short-term outlook remains positive but involves significant uncertainties due to the pandemic and the geopolitical situation in Eastern Europe.
• Leipurin revenue was EUR 31.7m vs our EUR 29.4m estimate, while EBIT was EUR -3.6m vs our EUR 0.7m estimate. Leipurin recorded an impairment loss to the tune of EUR 4.3m. The foodservice business accounted for EUR 3.0m of the loss, while the remaining EUR 1.3m was attributable to machine manufacturing.
• Other operations cost EUR 1.9m, compared to our EUR 1.5m estimate.
• Aspo guides flat EBIT for FY ’22 (EUR 42.4m in FY ’21).
• The BoD proposes EUR 0.23 per share dividend to be distributed, in addition to another distribution no more than EUR 0.22 per share at a later time, compared to the EUR 0.40/0.44 Evli/consensus estimates.

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The EUR 1.0m Q4 adj. EBIT was soft relative to estimates

Q4 revenue grew 33% y/y to EUR 36.5m vs the EUR 32.0m/31.8m Evli/cons. estimates. Buildings and infrastructure grew to be the largest industry and the fact highlights how there are many industries besides Wind power driving growth. Order intake was moderated due to the difficulties in the US and inflation had some negative impact on Q4 EBIT, but Exel continues to lift its own pricing and hence raw material price increases are not a major issue, at least not in the long-term perspective. We gather Exel’s raw material inflation pace slowed down somewhat late last year, which is not surprising considering the rate seen earlier during the year. That said, raw material prices don’t seem to be declining either and so the environment can still cause some short-term drag on EBIT. We estimate most of the EUR 0.9m q/q profitability improvement was attributable to the US unit.

We still estimate meaningful growth for this year

The US labor situation remains extraordinarily challenging and thus it will take at least some additional quarters before Exel again reaches the high single-digit EBIT margins it used to enjoy before the problems in the US materialized. Exel is doing the best they can to hire and retain local employees. Meanwhile demand appears to remain very strong across basically all geographies and customer industries. We revise our FY ’22 revenue estimate to EUR 150.7m (prev. EUR 146.8m), while our new EBIT estimate for this year is EUR 10.6m (prev. EUR 12.0m).

Long-term earnings potential continues to stand out

We believe Exel should have no trouble hitting EUR 150m top line especially when the US unit continues to progress. Exel has previously been able to reach 10% EBIT on a quarterly level (long-term target is above 10%). We expect FY ’22 results to still fall a lot short of the implied EUR 15m mark, and hence long-term upside remains significant. Exel is valued around 5.5-7.0x EV/EBITDA and 8.0-11.0x EV/EBIT on our FY ’22-23 estimates. Uncertainty around the US limits upside in the short-term and we thus revise our TP to EUR 9 (10). We retain our BUY rating.

Open report

Solid quarter
Marimekko came in strong with Q4 net sales of EUR 48.1m (+29% y/y). The growth was driven by wholesale and retail sales in Finland as well as wholesale sales in the APAC region and Scandinavia, while the EMEA region declined due to the actions to control grey exports. Retail sales in North America developed very strongly. Higher logistical costs reduced the gross margin to 57.9% (prev. 58.9%). Driven by increased net sales, the adj. EBIT improved by 17% y/y to EUR 7.6m (15.9% margin). Increased personnel (one-time bonus) and other costs weakened the adj. EBIT margin from 17.4% to 15.9%. EPS amounted to EUR 0.72 and the BoD proposed a dividend of EUR 3.60 (including an additional EUR 2 dividend).

Confirmation for international growth
International sales got back on a growth path in Q4’21 and the company guided the segment’s largest market, the APAC region, to grow clearly in FY’22. Segment’s strong development speaks about the increased brand awareness, particularly seen in Asia. In FY’22, we expect int’l net sales to grow by 14% y/y, while expecting domestic growth to slow down to 8% y/y due to the lack of large one-time wholesale deliveries. In our estimates, group revenue amounts to EUR 167.9m, and driven by increased logistical costs the gross margin falls below the comparison period to 60%. Driven by reduced gross margin and increased fixed costs, the adj. EBIT margin of 19.3% (adj. EBIT EUR 32.4m) falls also short of the record high comparison period.

HOLD with a TP of EUR 79 (84)
With our revised estimates, Marimekko trades with a 22-23E EV/EBIT multiple of 19-18x. The company’s valuation has historically varied between EV/EBIT multiple of 17-21x. With the slowdown in the earnings growth within the next few years and the decline in the acceptable valuation level, we downgrade our rating to HOLD (BUY) and adjust TP to EUR 79 (84).

Open report

Some softness expected in Q4
Solteq reports Q4 results on February 17th. Solteq’s Q3 results were softer than anticipated, as deliveries for two large-scale retail customers were postponed as a result of the impact of the global component shortage. Revenue still grew by over 10%, mainly organically, and the adj. operating profit margin was at a fairly decent 8.1%. We had previously expected fourth quarter figures to turn back on track with the start-up of the postponed projects. With the macroeconomic uncertainties still present we anticipate some softness to still be seen in the fourth quarter and have slightly lowered our estimates, still expecting fairly good growth but slightly lower margins y/y.

Potential remains but market uncertainties a disturbance
Solteq in our view remains in a good position to continue revenue and earnings growth in 2022. We anticipate the recurring revenue from the implemented Utilities business projects to start to show. We see that the demand for Solteq’s solutions, in particular within utilities and ecommerce, should under normalized circumstances remain at a healthy level. The market environment has however been somewhat challenging and has not appeared to improve significantly going into 2022. With the current uncertainties we have lowered our 2022e EBIT estimates by some 9% but still see room for double-digit y/y growth in operating profit. We expect revenue of EUR 76.3m and an adj. operating profit margin of 13.8%.

BUY with a target price of EUR 6.2 (6.8)
With our estimates revisions and current uncertainties, we adjust our TP to EUR 6.2 (6.8) and retain our BUY-rating. Our TP values Solteq at ~17x 2022 P/E, which is still fairly low, and upside potential remains solid should the market environment not threaten the earnings growth track.

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• Q4 revenue grew by 32.7% y/y and was EUR 36.5m vs the EUR 32.0m/31.8m Evli/consensus estimates. North America contributed by far the most to growth.
• Wind power was EUR 8.3m vs our EUR 7.9m estimate while Buildings and infrastructure amounted to EUR 8.4m, compared to our EUR 8.5m estimate. Equipment and other industries landed at EUR 7.1m, clearly above our EUR 5.4m estimate.
• Adjusted EBIT came in at EUR 1.0m vs the EUR 1.3m/1.4m Evli/consensus estimates. Exel USA’s profitability improved a bit q/q but continued to drag results.
• Q4 order intake was EUR 30.5m, down by 8.8% y/y.
• Exel guides flat revenue and increasing adjusted EBIT for FY ’22. In our view it is hard to guide increasing revenue this early in the year given the high comparison figure. Consensus estimates for FY ‘22 adjusted EBIT, at EUR 10.5m, are clearly above the EUR 6.0m comparison figure and we see it is likewise difficult to give any stronger wording this early in the year.
• The BoD proposes EUR 0.20 per share dividend to be distributed, compared to the EUR 0.25/0.22 Evli/consensus estimates.

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• Group net sales increased by 29% y/y to EUR 48.1m (41.6m/42.3m Evli/cons.). The growth was driven by wholesale and retail sales in Finland as well as wholesale sales in the APAC region and Scandinavia. Retail sales in North America developed very strongly.
• Finland: Net sales grew by 32% and amounted to EUR 30.6m (26.8m/26.8m Evli/cons.). Non-recurring promotional deliveries supported the good development of wholesale sales.
• International: Revenue increased by 23% y/y to EUR 17.4m (14.7m/15.5m Evli/cons.), representing 36% of total net sales. Sales development was strong in North America (+57%), Scandinavia (+40%), and the APAC region (+36%). The EMEA region (-21%) declined due to actions to control gray exports.
• Gross profit totaled EUR 27.8m (25.1m Evli). The company reported a gross margin of 57.9% (60.3% Evli). The margin was affected by increased logistical costs.
• Adj. EBIT improved by 35% y/y to EUR 7.6m (5.8m/6.0m Evli/cons.), meaning a 15.8% margin. The improvement in profitability was mainly driven by increased net sales.
• EPS grew by 35.6% y/y to EUR 0.72 (0.54/0.55 Evl/cons.).
• Dividend proposal: The BoD proposes FY’21 DPS of EUR 1.60 and extraordinary DPS of EUR 2.00 (1.60/1.60 Evli/cons.). In addition, the board has decided to pay FY’20 DPS of EUR 1.00.
• Guidance 2022: Revenue is expected to be above that of the comparison period (2021: EUR 152.2m). Adj. EBIT margin is expected to be between 17-20% (2021: 20.5%).

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Expecting a clear earnings improvement in Q4’21
We expect solid net sales growth of 17.4% from a weak comparison period, topline totaling EUR 125.5m vs. 123.4m cons. The growth is driven by both BUs (W&E +13.4% & IM +24.1%). We expect group adj. EBIT to improve by 29.6% y/y to EUR 18.3m (14.6% margin) vs. 16.8m cons. In our estimates, W&E contributes the EBIT with EUR 7.8m (10.3% margin) and IM with EUR 10.9m (22% margin) respectively. With the profitability improvement, we expect clear 60% EPS growth. We estimate the BoD to propose a dividend of EUR 0.63 vs. 0.64 cons.

Strategy execution continued, but component shortage disturbs topline growth in 2022
The company has successfully continued its strategy execution by its solid revenue growth in both BUs. The company also acquired software company AerisWeather to strengthen its growth in DaaS and SaaS recurring revenue businesses during Q1’22. Vaisala obtains valuable data-service and software development capabilities through the acquisition in addition to a few million recurring revenue impact. In 2022, we expect the growth pace to slow a bit down to 8.3% mainly due to uncertainties regarding component availability. Despite the supply chain issues, we expect solid 16% earnings growth in 2022.

HOLD with a target price of EUR 43
Vaisala has historically been trading with EV/EBITDA multiple around 20x. Currently, with a 21-22E EV/EBITDA of 22-19x, the company trades with a slight premium compared to its peers, but given Vaisala’s quality and lower risk profile, we find the premium justified. With our estimates intact, we retain our HOLD-rating and TP of EUR 43.

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Results will improve this year (and next)

Raute’s Q4 revenue grew 13% y/y to EUR 44m, while EBIT was EUR 0.5m vs our EUR -0.6m estimate; the gap was due to the allocation of cloud-based IT project costs, which were spread retroactively over many quarters. Raute’s Q4 EBIT was still a far cry from potential, but order momentum continued stronger than we expected and even Raute was surprised by the EUR 50m in Q4 orders. Q1 orders have remained robust, however not quite as high as in Q4, and we expect the figure to top EUR 30m. Raute can meet the current level of demand, but delivery times have naturally been prolonged. Raute guides improving EBIT, but various factors, including inflation, will make the precise gradient hard to gauge. The IT project also continues to burden short-term results yet will contribute to EBIT going forward.

Inflation will still burden near-term results

We make no significant changes to our estimates; we expect Raute to reach around 5% EBIT margin this year. H1’22 EBIT will still suffer from inflation as the orders signed earlier materialize, but the situation should improve somewhat throughout the year as the order book rolls forward and so catches up with higher component prices. We revise our FY ’22 EBIT estimate to EUR 8.6m (prev. EUR 9.0m), while our new FY ’23 estimate is EUR 11.3m (prev. EUR 11.0m). The inflationary environment’s precise impact on the order book’s unfolding remains to be seen, but in our view the current active order level means EBIT is set to improve for at least a few years.

We retain our EUR 22 TP and BUY rating

Raute’s valuation remains undemanding, around 5-6x EV/EBITDA and 6-8x EV/EBIT on our FY ’22-23 estimates, and in our view some caution is in order considering the uncertainty inflation imposes on near-term results. Yet we believe Raute is poised to again reach EUR 10m EBIT in the coming years. That mark would imply only around 6% EBIT margin, a level Raute has managed to top with some EUR 150m annual revenue, while current demand in our view can support a top line EUR 20-30m higher than that.

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Q4 quite in line with expectations
Etteplan reported Q4 results quite in line with expectations. Revenue grew some 21% to EUR 85.3m (EUR 82.9m/82.9m Evli/cons.), with organic growth of some 15%. EBIT amounted to EUR 7.8m (EUR 7.9m/8.1m Evli/cons.). Growth was particularly good in Software and Embedded solutions, although profitability suffered slightly from growth investments and the increased use of subcontracting due to the challenges with availability of professionals within certain areas.

Guidance implies solid growth
Etteplan gave a rather good guidance, in particular in terms of growth, with revenue expected to amount to EUR 340-370m and EBIT to EUR 28-32m, with pre-Q4 expectations of EUR 338.3m/326.9m (Evli/cons.) and 29.6m/29.6m (Evli/cons.) respectively. Taking into account the inorganic growth from the recent acquisitions of Cognitas and Syncore Technologies along with acquisitions made during 2021 the mid-range of the guidance would imply organic growth somewhere near 10%, which although certainly not unachievable, currently seems somewhat challenging due to the pandemic and some demand uncertainties. Growth could of course still be boosted by further acquisitions in line with the company’s strategy. The good organic growth in 2021 (8.9% y/y) was also skewed by the weak comparison period. We have made only slight changes to our 2022 estimates, expecting revenue of EUR 344.5m and EBIT of EUR 29.3m. Some weakness is seen during the start of 2022 due to the pandemic but we expect relative profitability and growth to pick up going forward.

HOLD with a target price of EUR 17.5 (17.0)
With only smaller changes to our estimates, we adjust our target price to EUR 17.5 (17.0), valuing Etteplan at approx. 20x 2022e P/E. Current valuation appears quite fair looking at peers and historical multiples. We retain our HOLD-rating.

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• Q4 revenue grew by 13% y/y to EUR 44.1m. Project deliveries amounted to EUR 29.1m vs our EUR 27.0m estimate, while technology services stood at EUR 15.0m vs our EUR 17.0m estimate.
• EBIT was EUR 0.5m, compared to our EUR -0.6m estimate. We see the difference was mostly due to the fact the IT project costs were booked over several quarters.
• Order intake was EUR 50m vs our EUR 29m estimate. Project deliveries orders were EUR 36m, compared to our EUR 13m estimate, which we consider a very strong figure as there were no big orders. Technology services amounted to EUR 14m vs our EUR 16m estimate.
• Order book stood at EUR 158m at the end of Q4 (EUR 94m a year ago).
• Raute guides growing revenue and improving EBIT for FY ’22.
• The BoD proposes a dividend of EUR 0.80 per share to be paid out vs our EUR 0.85 estimate.

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Tough quarter behind
The company’s net sales decreased by 4% y/y to EUR 168.9m driven by weak demand for its core categories. The growth was good in the B2B segment as well as in Computers, Games, Sports, and Toys products categories. The online transition continued and e-commerce represented 63% of total net sales. Despite tough market conditions, gross margin improved to 15.5% (15.1%), mainly driven by category mix and wise pricing decisions. Adj. EBIT declined by 14% y/y to EUR 5.3m (3.2% margin) due to lower sales. EPS amounted to EUR 0.09 and BoD proposed a dividend of EUR 0.246.

Guidance implies growth to continue
The company guides net sales growth and possible profitability improvement during 2022. Revenue is estimated to reach EUR 590-640m and EBIT EUR 19-15m. Driven by weakened visibility to the consumer electronics market, we have made some adjustments to our estimates. In 2022, we expect net sales of EUR 610.0m and EBIT of EUR 22.3m (3.7% margin). The growth is driven by online transition and good development of the evolving categories. In Q1’22, we expect the core categories to still suffer from weak demand and net sales amount to EUR 133.6m and EBIT totaling EUR 3.9m (2.9% margin). Jätkäsaari’s automated warehouse is estimated to be in production until the end of Q1’22 and we are expecting cost savings to kick in during H2’22 as the utilization rate of Vantaa rental warehouse will decrease.

HOLD with a target price of EUR 6.5
With our revised estimates, the company valuation is still slightly elevated. The company’s peers trade with 22E P/E 14-17x, while Verkkokauppa.com is trading at the upper bound of the range. We retain our HOLD rating and TP of EUR 6.5.

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• Net sales in Q4 were EUR 85.3m (EUR 70.3m in Q4/20), slightly above our estimates and consensus estimates (EUR 82.9m/82.9m Evli/Cons.). Growth in Q4 amounted to 21% y/y, of which 15.2% organic growth.
• Operating profit in Q4 amounted to EUR 7.8m (EUR 7.1m in Q4/20), in line with our estimates and slightly below consensus (EUR 7.9m/8.1m Evli/cons.), at a margin of 9.2%. EBITA amounted to EUR 9.0m vs. our estimate of EUR 8.9m.
• EPS in Q4 amounted to EUR 0.26 (EUR 0.23 in Q4/20), above our estimates and consensus estimates (EUR 0.24/0.24 Evli/cons.).
• Engineering Solutions net sales in Q4 were EUR 47.1m vs. EUR 47.6m Evli. EBITA in Q4 amounted to EUR 5.0m vs. EUR 4.9m Evli.
• Software and Embedded Solutions net sales in Q4 were EUR 23.4m vs. EUR 21.5m Evli. EBITA in Q4 amounted to EUR 2.4m vs. EUR 2.8m Evli.
• Technical Documentation Solutions net sales in Q4 were EUR 14.3m vs. EUR 13.6m Evli. EBITA in Q4 amounted to EUR 1.7m vs. EUR 1.5m Evli.
• Dividend proposal: Etteplan’s BoD proposes a dividend of EUR 0.40 per share (EUR 0.40/0.40 Evli/Cons.).
• Guidance for 2022: Revenue is estimated to be EUR 340-370m (EUR 338.3m/326.9m Evli/cons.) and the operating profit is estimated to be EUR 28-32m (EUR 29.6m/29.6m Evli/cons.).

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We make small upward revisions to our Q4 estimates

Pihlajalinna’s EBIT continued to improve in Q3 despite an increase in outsourcing costs for which the company hadn’t yet received much compensation. The Finnish virus situation worsened again in Q4, and we believe Omicron has had a slight positive net effect on Q4 top line and EBIT; we previously expected Covid-19 services revenue to decline some in Q4 but we now estimate it to have remained pretty much flat q/q. We update our Q4 revenue estimate to EUR 156.4m (prev. EUR 153.9m) and thus expect y/y growth to have remained around 14%. We estimate y/y EBIT improvement to have steepened a bit in Q4 and now estimate Q4 EBIT at EUR 9.2m (prev. EUR 8.9m).

The acquisition will limit EBIT guidance in H1’22

Pihlajalinna has just completed the acquisition of Pohjola Hospital, a chain with a focus on orthopaedics and some EUR 60m in revenue, which make it a target of reasonable size and complementary fit for Pihlajalinna. The target turned a loss of EUR 10m in terms of EBIT in FY ’20 due to a dip in volumes; the losses might have narrowed somewhat already in FY ’21, however this hadn’t happened during the first 4 months of the year, but we expect losses or at least margin dilutive impact in H1’22. Margin accretion should occur in FY ’23 as insurance customers drive volumes and Pihlajalinna achieves cost synergies. We expect more specific updates to financial targets either in connection with the Q4 report or later during the spring. We continue to expect meaningful EBIT upside beyond this year and last, although we believe Pihlajalinna will not guide much more than flat or slightly improving EBIT for FY ’22 at such an early point when the target’s integration has only started.

Both margins and multiples remain on the modest side

Our view is unchanged as Pihlajalinna trades ca. 6.5-8.0x EV/EBITDA and 13.0-16.5x EV/EBIT on our FY ’21-22 estimates. The multiples are well below peers’ while margins remain at relatively modest levels. We retain our EUR 14 TP and BUY rating.

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