Vaisala |

A global leader in enviromental and industrial measurement

Industry 2 | Finland

Investment case Investment case Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus volutpat, nibh ac porttitor condimentum, purus nulla placerat massa, in eleifend nisi tellus nec lorem. Vivamus posuere hendrerit est ac dapibus. Interdum et malesuada fames ac ante ipsum primis in faucibus. Morbi posuere posuere bibendum. Cras ullamcorper mi et aliquam scelerisque. Proin nec ligula maximus, consectetur odio id, elementum neque. Aliquam lacinia dui in velit semper, sit amet rutrum justo euismod.

re hendrerit est ac dapibus. Interdum et malesuada fames ac ante ipsum primis in faucibus. Morbi posuere posuere bibendum. Cras ullamcorper mi et aliquam scelerisque. Proin nec ligula maximus, consectetur odio id, elementum neque. Aliquam lacinia dui in velit semper, sit amet rutrum justo euismod.

Financial overview

Header201720182019202020212022
Header201720182019202020212022
Header201720182019202020212022
Header2019/12019/22019/32019/420192020/12020/22020/32020/42020
Header201720182019202020212022
Header201720182019202020212022
Header201720182019202020212022

Vaisala - Clouds over W&E while IM keeps on rocking

29.04.2020 | Company update

Vaisala delivered a better than expected Q1 result. Overall, Vaisala is well positioned to weather the corona storm, but clouds are gathering above W&E as project business is exposed to the pandemic. Given the uncertainty to W&E’s performance in H2, we do not see short term risk/reward profile particularly attractive now. Based on our slightly raised estimates, we raise our target price to 26€ (prev. 25€), our recommendation is now HOLD (prev. SELL).

No major impact of corona in Q1
Vaisala delivered a better than expected Q1 result as corona did not have major impact on business in the quarter and delivery capabilities remained good. Q1 net sales grew 4% to 87.2 MEUR vs. 84.5 MEUR our expectation and 84.3 MEUR consensus. Q1 reported EBIT was 5.2 MEUR (6% margin) vs. our expectation of 2.1 MEUR (3.2 MEUR consensus). EBIT improvement was due to strong 3pp improvement in gross margins (56.4% vs. 53.2% Q1’19), which was attributed to projects and digital services in W&E and exceptionally high GM of 65.8% in IM. Q1 order intake decreased -21% due to lower order intake in W&E. It’s worth noting however that order intake comparison period was exceptionally good (including two large projects) and variations between quarters can be large depending on timing of projects. Order book grew +2% q/q and -6% y/y. The Ethiopian project order (13 MEUR) is not yet included in order book.

W&E business exposed while IM continues on track
Vaisala reiterated its 2020 guidance (updated on April 21st); expecting net sales of 370–405 MEUR and EBIT of 34–46 MEUR. With W&E’s current strong order book, descent order intake, and delivery capabilities remaining at current acceptable levels, we expect W&E business to perform well in H1. The effects of the corona pandemic impact more on W&E business in H2, where delays or postponements of projects become more likely if current situation is prolonged. Vaisala sees developed countries market remaining more stable while developing countries being more hit by the pandemic. IM is expected to continue growing, albeit slower than last year’s organic growth of roughly 9.5%.

Valuation stretched given weakened financial outlook in W&E
We’ve only made small adjustments to our estimates based on the report. We expect IM to continue performing well, while W&E to decline in H2 partly due the pandemic and high comparison period. We expect 2020e net sales to decline 3% to 392 MEUR and reported EBIT to decline to 39 MEUR, mainly due to the lower performance in W&E in H2. On our estimates, Vaisala is still trading at clear premiums compared to our peer group. Also, our 2020-21e PPA-adjusted EV/EBIT multiples of 22x and 19x, are ~25% above our peer group. Given the uncertainty to W&E’s performance this year, we do not see short term risk/reward profile particularly attractive now. Based on our slightly raised estimates, we raise our target price to 26€ (prev. 25€), our recommendation is now HOLD (prev. SELL). Our target price values Vaisala at 20-21e EV/EBIT multiples of 23.5x and 20x which is above peer group, reflecting Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - W&E business hurting from corona

22.04.2020 | Company update

Vaisala issued yesterday a profit warning due to estimated impacts related to the coronavirus pandemic. Consequently, we’ve revised down our estimates for 2020. Despite Vaisala being a great company, we see current valuation unattractive given the weakened financial outlook. We maintain our SELL with new target price of 25 euros (prev. 29.5).

W&E’s project and services business suffering from corona
Vaisala expects delays or interruptions particularly in project and services deliveries due to the extensive restrictions imposed by governments and authorities. Demand in W&E has to some extent already weakened and Vaisala estimates that the situation will become more challenging as governments have tighter budgets, especially in emerging markets. The profit warning did not come as a complete surprise given that Vaisala’s largest segment, W&E, consists roughly 40-45% of projects and services, and the growth is very dependent on investments from emerging market governments. Vaisala does not expect demand for IM to change materially, but growth will slow down from last year (+22.2%).

New guidance broader as predicting is currently difficult
Vaisala’s now expects 2020 sales will be between 370–405 MEUR and EBIT between 34–46 MEUR (prev. sales 400–425 MEUR and EBIT 38–48 MEUR). The outlook’s range for both net sales and EBIT is wide due to high uncertainty related to the duration and impact of coronavirus pandemic as well as unknown speed of recovery. Vaisala will provide an update to its market outlook in connection with its Q1 report due next week on Tuesday 28th.

Valuation still stretched given weakened financial outlook
Based on the new outlook, we have cut our estimates for 2020e and the coming years. For 2020e, we’ve cut our sales and EBIT estimates with 8% and 20% respectively. We expect 2020e net sales to decline 3% to 390 MEUR and reported EBIT to decline to 34.9 MEUR, mainly due to lower performance in W&E. On our renewed estimates, Vaisala is still trading at clear premiums compared to our peer group, which we do not see justified given the financial performance outlook currently weighed down by W&E. We maintain our SELL with new target price of 25 euros (prev. 29.5). Our target price values Vaisala at 20e EV/EBIT multiple of 25x which is still above peer group, reflecting Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions.

Vaisala - Valuation running ahead of things

13.02.2020 | Company update

Vaisala ended a solid 2019 with a good Q4 that beat expectations. The outlook for 2020 was rather cautious with current expectations already at upper range of guidance. Both acquired companies contributed significantly in last year’s growth, and we see further M&A as key to accelerate growth and maintain current valuation. Our estimates remain broadly unchanged post Q4 and thus we maintain previous TP of EUR 29.5. Due to continued share price rally our recommendation is now SELL (prev. HOLD).

A good finish to a solid year

Vaisala ended a solid 2019 with a good Q4 that beat expectations. Q4 net sales grew 9% y/y to 118.1 MEUR (118 Evli, 116 cons) and EBIT improved +27% to 17.7 MEUR (16 MEUR Evli/cons.). Dividend proposal is 0.61 (0.60 Evli/cons.). Net sales growth was driven by good level of delivery volumes thanks to record high order book during end of last year. Q4 EBIT improvement was driven by gross margin improvement of 170 bps due to net sales growth and scale benefits.

Both business areas fuelled by M&A

W&E Q4 net sales grew 5% (1% excl. FX and M&A) to 81.9 MEUR (80.0 Evli), with growth in all regions except China. W&E Q4 EBIT was 12.1 MEUR (10 Evli). W&E order intake growth was -3%, -8% growth excl. FX and M&A, due to less larger projects during Q4. IM Q4 net sales grew 18% (5% excl FX and M&A) to 36.3 MEUR (38.0 Evli) and was strong in all regions. IM Q4 EBIT was 5.5 MEUR (7.6 Evli). IM order intake grew by 19%, 8% excl. FX and M&A. Both acquired companies, i.e. Leosphere (W&E) and K-patents (IM), have been successfully integrated to Vaisala’s platform and contributed significantly in FY’19 growth. Half of IM’s FY’19 net sales growth came from K-Patents acquisition, while W&E FY’19 net sales growth excluding FX and M&A was 2%. Vaisala has indicated the possibility of further add-on acquisitions in liquid measurements area. With its platform, strong balance sheet and current valuation, Vaisala is in a good position to continue value accreditive acquisitions in our view.

2020 outlook slightly soft as expectations already in upper end

Vaisala estimates its 2020 net sales to be in the range of 400–425 MEUR and EBIT in the range of 38–48 MEUR, which practically means 0-5% growth and 9-12% EBIT margins. Given that our previous 2020 estimates, as well as consensus figures (FY’20E net sales 423M, EBIT 48.3 MEUR) were already in the upper end of the outlook, the guidance is cautious. Vaisala expects W&E market segments to be stable or somewhat grow, while industrial and liquid measurement market segments are expected to continue to grow.

Estimates unchanged, valuation is running ahead of things

Apart from a slight trim to our sales estimates, our estimates are unchanged for the coming years. With the acquired businesses integrated into Vaisala’s sales channel and continued stable to good organic momentum in both W&E and IM, we see Vaisala’s targeted above 5% sales growth achievable and road to >12% margins progressing well. The underlying main driver for growth is continued good growth in industrial business supported by further bolt-on acquisitions. As a result, we estimate IM share of Vaisala’s EBIT to grow to 66% in ‘21E (vs. 56-57% in ’17-’18), driving ~10% EBIT growth in coming years. Vaisala’s share har continued to rally, pushing new all-time highs. On our estimates, Vaisala is trading at PPA amortizations adjusted EV/EBIT multiples of 24.7x and 22.4x for ‘20E and ‘21E, a ~50% premium to our peer group median despite exhibiting lower profitability profile than our peer group. On our adjusted ‘20E P/E multiples, premium is roughly 50% as well. Despite Vaisala’s strong sustainability profile, growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions, we see current valuation too stretched given our current growth and earnings estimates (which do not account for further M&A). We maintain previous TP of EUR 29.5, which values Vaisala at EV/EBIT 23.5x and 21x on ’20-21E, still at ~40% premium to our peer group. Due to continued share price rally our recommendation is now SELL (prev. HOLD).

Vaisala - Q4 result small beat, 2020 outlook signals 0-5% growth and 9-12% EBIT margins

12.02.2020 | Earnings Flash

Vaisala’s Q4 net sales grew 9% to 118.1 MEUR vs. 118 MEUR our expectation and 116 MEUR consensus. Q4 reported EBIT was 17.7 MEUR vs. our expectation of 16 MEUR (16 MEUR consensus). Dividend proposal is 0.61(0.60 Evli, 0.60 consensus).

• Group level results: Q4 net sales grew 9% to 118.1 MEUR vs. 118 MEUR our expectation and 116 MEUR consensus. Q4 EBIT was 17.7 MEUR vs. our expectation of 16 MEUR (cons. 16 MEUR). EPS was 0.41 (0.35 Evli, 0.34 consensus).

• Dividend proposal is 0.61(0.60 Evli, 0.60 consensus).

• Gross margin was 56.0 % vs. 54.3 % last year.

• Orders received was 103.3 MEUR vs. 99.1 MEUR last year. Orders received increased by 4% and growth without currency impact and acquisitions was -3%.

• Weather & Environment (W&E) net sales grew 5% (1% excl. FX and M&A) to 81.9 MEUR vs. 80.0 MEUR our expectation. EBIT was 12.1 MEUR (10 MEUR Evli). Order intake growth was -3% in Weather and Environment, -8% growth excl. FX and M&A.

• Industrial Measurements (IM) net sales grew 18% (5% excl FX and M&A) to 36.3 MEUR vs. 38.0 MEUR our expectation. EBIT was 5.5 MEUR (7.6 MEUR Evli). Industrial Measurements order intake grew by 19%, 8% excl. FX and M&A.

• Business outlook for 2020: Vaisala estimates its full-year 2020 net sales to be in the range of EUR 400–425 million and its operating result (EBIT) to be in the range of EUR 38–48 million.

Vaisala - Upgrades outlook on continued good momentum

12.12.2019 | Company update

Vaisala upgraded yesterday its 2019 outlook. The upgrade did not come as a surprise as momentum in both business units have continued strong and as such our estimates were already taking this into account. We’ve made small upward adjustments to our estimates. We maintain our HOLD recommendation with new TP of 29.5 (prev. 24.5).

Continued good momentum in both business areas

Vaisala cited that strong demand in both business areas has continued. In Q3 Vaisala’s orders received YTD was up +34% yoy with bulk of growth being organic, supported by acquired businesses. Strikes in November and December have been a significant risk to production and logistics, but Vaisala has been able to maintain its good delivery capacity also during Q4. The continued strong demand has had a positive impact on gross margin and project margins have also remained at a good level. However, there are still uncertainties related to the rest of the year, like the ongoing strikes in France, and estimating the impact of these is challenging.

Outlook upgrade not a surprise, estimates slightly upwards

Vaisala now estimates 2019 net sales of 395-405 MEUR and EBIT to be in the range of 36-42 MEUR. Previous outlook was net sales of 380-400 MEUR with EBIT of 25-35 MEUR including 10-12 MEUR acquisition related amortization and one-off expenses. As our 2019E estimates for net sales of 398 MEUR were in the upper range of the previous guidance and our EBIT estimate of 36.4 MEUR was slightly above previous guidance, the outlook upgrade did not come as a surprise. We have slightly adjusted our 2019 and onwards estimates upwards reflecting the continued good momentum. As noted previously, with acquired businesses integrated into Vaisala’s sales channel and continued good organic momentum in both W&E and IM, we see targeted 5% sales growth clearly achievable and road to >12% margins progressing well. The driver for profitability improvement is larger volumes and continued good growth in industrial business. We estimate IM share of Vaisala’s EBIT in ’20-21E to grow to 66% (vs. 56-57% in ’17-’18), driving Vaisala’s ~10-12% EBIT growth and EBIT margins of 10.5-11% (12-13% adj. for IAC).

Valuation is stretched, but justified

Vaisala’s share har rallied +105% YTD, being now at an all-time high. On our raised estimates, Vaisala is trading at PPA amortizations adjusted EV/EBIT multiples of 23x and 21.6x for ‘19E and ‘20E, a 30-38% premium to our peer group median despite exhibiting lower profitability profile than our peer group. However, a high valuation and premium are in our view justified due to the current stable outlook for W&E, strong ESG profile and growing dividend, and especially IM’s highly profitable growth with possibility of further add-on acquisitions. On the back of our raised estimates, we raise our target price to 29.5 euros (prev. 24.5) and maintain our HOLD recommendation.

Vaisala - Strong performance continues

25.10.2019 | Company update

Vaisala delivered a strong Q3 on all fronts but surprisingly kept their guidance intact despite strong YTD performance and good momentum in both W&E and IM. We’ve updated our estimates for the coming years due to better overall growth profile and increasing profitability driven by IM’s continuing good performance. On the back of our raised estimates, we raise our target price to 24.5 euros (prev. 21) and maintain our HOLD recommendation.

Strong quarter on all fronts, with contribution from W&E

On the back of a good Q2 report, Vaisala delivered an even better Q3, which clearly beat expectations. Orders received increased +37% y/y (+20% organic) to 105.1m (vs. 76.8m Q3’18), with orders received as well as sales growth coming from both business areas and all geographies. Order intake for W&E was +45% (+27% organic), with mostly mid-sized orders, a positive signal. Q3 net sales grew +25% to 105.2m (vs. 100.4m Evli / 99.7m cons.). With the help of strong sales growth (W&E +27%, IM +22%), EBIT was 16.3m (vs. 11m Evli/13m cons), an 15.5% EBIT margin. IM posted good figures, with +22.4% growth (9% organic), an all-time high quarter, and solid 23.6% EBIT margin (24.7% adj. margin). Biggest positive contribution was W&E with +27% (+14% organic) sales growth, and EBIT margin of 13.5% (16% adj. margin).

Outlook unchanged despite strong performance so far

Despite the beat and good figures YTD, Vaisala repeated its FY’19 guidance: sales between 380–400m, EBIT between 25–35m including 10–12m PPA amortization and one-offs. Our pre-Q3 estimates were already in the upper end of the guidance, and now with the result beat we have raised our FY’19E estimates slightly above the guidance. We also increase by ~2% our estimates for 2020E-21E due to better growth profile in both business areas. With the acquired businesses integrated into Vaisala’s sales channel and continued good organic momentum in both W&E and IM, we see targeted 5% sales growth clearly achievable. We estimate that IM share of Vaisala’s EBIT in ‘19E and ‘20E will be around 65-67% (vs. 56-57% in ’17-’18), resulting in ~13-17% EBIT growth and EBIT margins of 10-11% (12-13% adj. for PPA).

Valuation becoming stretched

Vaisala’s share har rallied +70% YTD and +30% since Q2 the report, being now at an all-time high. On our raised estimates, Vaisala is trading at adj. EV/EBIT multiples of 20x and 18.5x for ‘19E and ‘20E, a 20-26% premium to our peer group despite exhibiting a lower growth and profitability profile than our peer group. However, a high valuation and premium are in our view justified due to the stable outlook for W&E and especially IM’s highly profitable growth with possibility of further add-on acquisitions. On the back of our raised estimates, we raise our target price to 24.5 euros (prev. 21) and maintain our HOLD recommendation.

Vaisala - Strong Q3 result, clear beat

24.10.2019 | Earnings Flash

Vaisala delivered a strong Q3 report, with a solid perfomance all around. Vaisala’s Q3 net sales grew 25% to 105.2 MEUR vs. 100.4 MEUR our expectation and 99.7 MEUR consensus. Q3 reported EBIT was 16.3 MEUR vs. our expectation of 11 MEUR (13 MEUR consensus). Business outlook is unchanged.

  • Group level results: Q3 net sales grew 25% to 105.2 MEUR vs. 100.4 MEUR our expectation and 99.7 MEUR consensus. Q3 EBIT was 16.3 MEUR vs. our expectation of 11 MEUR (cons. 13 MEUR). EPS was 0.37 (0.23 Evli, 0.27 consensus).
  • Gross margin was 55.3% vs. 55.9% last year
  • Orders received was 105.1 MEUR vs. 76.8 MEUR last year. Orders received increased by 37% and growth without currency impact and acquisitions was 20%.
  • Weather & Environment (W&E) net sales grew 27% (14% excl. FX and M&A) to 69.1 MEUR vs. 66.0 MEUR our expectation. EBIT was 9.3 MEUR (5.0 MEUR Evli). Order intake growth 45% in Weather and Environment, 27% growth excl. FX and M&A.
  • Industrial Measurements (IM) net sales grew 22% (9% excl FX and M&A) to 36.1 MEUR vs. 34.5 MEUR our expectation. EBIT was 8.5 MEUR (6 MEUR Evli). Industrial Measurements order intake grew by 23%, 9% excl. FX and M&A.
  • Business outlook for 2019 unchanged: 2019 net sales to be in the range of EUR 380–400 million and operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract.

Vaisala - Performance on track

22.07.2019 | Company update

Vaisala delivered a good Q2 result with a clear EBIT beat. The outlook for 2019 remains positive as Vaisala enters H2 which is seasonally stronger for W&E. The acquisitions of Leosphere and K-Patents are bearing fruit and we see both accelerating sales further when fully integrated into Vaisala’s sales channel. We raise our target price to 21 euros (prev. 20) but maintain HOLD recommendation.

Acquired businesses bearing fruit

Vaisala’s Q2 net sales were 96.1 MEUR vs. 94.2 MEUR our expectation (93.5 MEUR consensus). Q2 EBIT was 7.2 MEUR vs. our expectation of 3.2 MEUR (4.5 MEUR consensus). The EBIT beat was driven by slightly better sales growth and 4 percentage points higher gross margin (54% vs. 50% Q2/18) in both business units, which was a result of product and project profitability, and currency tailwind. W&E’s net sales growth was 16.7% and it came mostly from wind lidars. IM net sales growth was 26%, with K-Patents contributing around 12% of the growth. The integration of Leosphere is now complete and K-Patents is expected to be integrated during Q3, therefore sales synergies should start to become more visible during H2.

H2 seasonally stronger for W&E, estimates revised upward

After the solid Q2 result, Vaisala is on track to deliver in H2, which is seasonally stronger for W&E. Post Q2 result, we have adjusted slightly upward both our sales and EBIT estimates for this year and coming years reflecting the confidence we have in Vaisala’s strategy. We expect 2019E net sales to be 392 MEUR (12% growth yoy) and reported EBIT to be 35 MEUR (46 MEUR adjusted for PPA and one-offs), representing 9% EBIT margin (12% adj. EBIT margin). Our EBIT estimates are now in the upper end of the company’s 2019 guidance. For 2020-21E, we expect 4-5% net sales growth, and we estimate EBIT margin to gradually improve from 9% 2019E towards 11% 2021E (adjusted EBIT margin from 12% 2019E towards 13% in 2021E).

HOLD maintained with revised TP of 21 euros (prev. 20)

On our adjusted EBIT estimates, Vaisala is trading some 10-15% under our peer group on EV/EBIT multiples. Reflecting our estimates revisions, we raise our target price to 21 euros (prev. 20) but maintain HOLD recommendation.

Vaisala - Clear Q2 beat, with good contribution from acquired businesses

19.07.2019 | Earnings Flash

Vaisala’s Q2 net sales at 96.1 MEUR vs. 94.2 MEUR our expectation and 93.5 MEUR consensus. Q2 EBIT was 7.2 MEUR vs. our expectation of 3.2 MEUR (4.5 MEUR consensus). Adjusted EBIT was 9.4 MEUR vs. our 6.2 MEUR adjusted EBIT expectation.

  • Group level results: Q2 net sales at 96.1 MEUR vs. 94.2 MEUR our expectation and 93.5 MEUR consensus. Q2 EBIT was 7.2 MEUR vs. our expectation of 3.2 MEUR (4.5 MEUR consensus). Adjusted EBIT was 9.4 MEUR vs. our 6.2 MEUR adjusted EBIT expectation. EPS was 0.14 (0.06 Evli, 0.08 consensus).
  • Gross margin was 54.2% vs. 50.1% last year
  • Order received was 98.0 MEUR vs. 71.1 MEUR last year
  • Weather & Environment (W&E) net sales was 63.2 MEUR vs. 60.2 MEUR our expectation. EBIT was 0.6 MEUR (-1.5 MEUR Evli)
  • Industrial Measurements (IM) net sales was 34.8 MEUR vs. 34.0 MEUR our expectation. EBIT was 7.5 MEUR (4.7 MEUR Evli)
  • CEO comment: “Vaisala’s second quarter orders received and net sales were strong in all geographical areas. Around half of the order growth came from acquired companies. Excellent growth of orders received in Weather and Environment Business Area reached 49%. This growth was generated by medium-sized orders and especially in sounding and wind lidar businesses.”
  • Business outlook for 2019 unchanged: 2019 net sales to be in the range of EUR 380–400 million and operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract.

Vaisala - CMD notes: Roadmap for profitable growth

17.06.2019 | Company update

Vaisala held its CMD last Friday, where the company provided insight into its businesses and updated strategy. Based on the CMD and updated financial targets, we see Vaisala’s roadmap for profitable growth as attainable and we have made smaller upward adjustments to our sales estimates. We maintain HOLD recommendation with new target price of 20 euros (prev. 18).

Updated financial targets – more emphasis on growth

Vaisala targets an average annual growth exceeding 5% and EBIT margin exceeding 12%. Earlier Vaisala’s objective was growth with an average annual growth of 5%, and to achieve 15% EBIT margin. The slightly more ambitious growth target is based on both organic and non-organic opportunities, with key areas of growth being liquid measurements, new industrial instruments, digital solutions, and wind lidars. The recent acquisitions of Leosphere (wind lidars) and K-Patents (liquid measurements), provide growth areas for both W&E and IM segments.

Roadmap for profitable growth

We have made minor upward changes to our sales estimates based on the presented roadmap and new financial targets. We expect 2019E net sales to be 390 MEUR (12% growth yoy, driven by Leosphere and K-Patents acquisitions) and EBIT to be 31 MEUR (43 MEUR adjusted for PPA and one-offs), representing 8% EBIT margin (11% adj. EBIT margin). For 2020-21E, we expect above 4% net sales growth, and we estimate EBIT margin to gradually improve from 8 % 2019E towards 10% 2021E (adjusted EBIT margin from 11% 2019E towards 12% in 2021E). Non-organic growth is very likely (although not reflected in our estimates), hence we see above 5% growth very achievable.

HOLD maintained with TP of 20€ (prev. 18)

On our estimates, Vaisala is trading close to par with our peer group on adjusted EV/EBIT multiples. On EV/Sales multiples, Vaisala is trading below peers, reflecting the potential valuation upside should Vaisala succeed in accelerating its profitable growth. We raise target price to 20 euros (prev. 18) but maintain HOLD recommendation.

Vaisala - Focus on integration and execution in H2

25.04.2019 | Company update

Vaisala’s Q1 missed our estimates, but overall our expectations for full year 2019E remain intact. After two recent acquisitions and subsequent increase in operating expenses, Vaisala needs to succeed in integrating the acquired business. Strong received orders and pick up in larger projects support outlook. We maintain HOLD recommendation with target price of 18 euros.Vaisala’s Q1 missed our estimates, but overall our expectations for full year 2019E remain intact. After two recent acquisitions and subsequent increase in operating expenses, Vaisala needs to succeed in integrating the acquired business. Strong received orders and pick up in larger projects support outlook. We maintain HOLD recommendation with target price of 18 euros.

Q1 miss, but order book and projects support outlook

Vaisala’s Q1 result miss was due to lower than expected seasonal net sales in Weather & Environment. W&E net sales were 49.6 MEUR vs. 55 MEUR our expectation, while Industrial Measurements net sales were 34.6 MEUR vs. 33 MEUR our expectation. On Group level, Q1 EBIT came in at 0.0 MEUR vs. our expectation of 2.3 MEUR. Despite Q1 miss, the outlook for both BU’s looks supportive with strong orders received (+30%) and recent pick up in larger W&E projects (15 MEUR Argentina and 7 MEUR Sweden deals announced).

Estimates unchanged, OPEX increase to weigh on 2019E EBIT

Post Q1, our estimates are unchanged. We expect 2019E net sales to be 382 MEUR (10% growth yoy) and EBIT to be 31 MEUR (41 MEUR adjusted for PPA and one-offs), representing 8.1% EBIT margin (10.8% adj. EBIT margin). Estimated EBIT decline in 2019E is due to acquisitions related increase in operating expenses, which we estimate to increase roughly 16% to 172 MEUR (vs. 148 MEUR 2018).

HOLD maintained with target price of 18 euros

On our estimates, Vaisala is trading at adjusted EV/EBIT and EV/EBITDA multiples of 17x and 14x for 2019E, which is 4-8% lower than our peer group. Looking at 2020E multiples, valuation looks slightly more attractive given our estimated EBIT improvement, but we are not ready to put emphasis on next year due to the on-going process of integrating the acquired businesses. We see current valuation as fair, thus we maintain HOLD and target price of 18 euros.

Vaisala - Q1 below our expectations

24.04.2019 | Earnings Flash

Vaisala’s Q1 net sales at 84.2 MEUR vs. 87 MEUR our expectation and 88.5 MEUR consensus. Q1 EBIT was 0.0 MEUR vs. our expectation of 2.3 MEUR. Adjusted EBIT was 3.0 MEUR vs. our 5.0 MEUR adjusted EBIT expectation.

  • Group level results: Q1 net sales at 84.2 MEUR vs. 87 MEUR our expectation and 88.5 MEUR consensus. Q1 EBIT was 0.0 MEUR vs. our expectation of 2.3 MEUR. Adjusted EBIT was 3.0 MEUR vs. our 5.0 MEUR adjusted EBIT expectation
  • Gross margin was 53.2% vs. 51.3% last year
  • Orders received was 113 MEUR vs. 87.1 MEUR last year
  • Weather & Environment (W&E) net sales was 49.6 MEUR vs. 55 MEUR our expectation. EBIT was -4.3 MEUR
  • Industrial Measurements (IM) net sales was 34.6 MEUR vs. 33 MEUR our expectation. EBIT was 4.6 MEUR
  • CEO comment: “Integration of Leosphere is proceeding according to plan and integration of K-Patents has started well during the first quarter. We expect to complete these integration projects during the second half of this year.”
  • Business outlook for 2019 unchanged: 2019 net sales to be in the range of EUR 380–400 million and operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract.

Vaisala - Pressure on profitability in 2019

14.02.2019 | Company update

Vaisala’s dividend proposal was in-line with expectations, but outlook was slightly weaker than expected. Due to increase in R&D and sales & marketing spend, we’ve cut our EBIT estimates for 2019. We maintain HOLD recommendation with new target price of EUR 18 (prev. 19).

Outlook for 2019

Vaisala expects market for traditional weather solutions to be flat in 2019, while market for industrial measurement solutions is expected to continue to grow in all regions. Increasing investments in R&D and sales & marketing are expected to burden profitability in 2019. Vaisala estimates its full-year 2019 net sales to be in the range of EUR 380–400 million and its operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract. The new outlook with an adjusted EBIT range of EUR 35-47m was slightly weaker than what we had expected; our previous EBIT estimate of EUR 45m (46m cons) being in the higher end of the range.

Estimates revised down for 2019

We expect Vaisala’s 2019E net sales to be EUR 385m representing +10% growth y/y. Sales growth will be driven by the recent acquisitions, Leosphere and K-Patents, which we estimate to add around 24 MEUR and 12 MEUR to top line in 2019E. We’ve adjusted our 2019E EBIT estimates downwards to reflect increase in R&D and sales & marketing spend. We estimate 2019E reported EBIT to be EUR 31m (EUR 42m adjusted for EUR 11m PPA and one-off expenses). For 2020-21 we expect 3.6% and 4.3% growth, with operating margin improving to 11.6% and 11.8% respectively.

HOLD maintained with new TP of 18 (prev. 19)

On our revised estimates Vaisala is trading at EV/EBIT and EV/EBITDA multiples that are ~10% lower than our peer group, but we see this as fair given the near-term weaker outlook. We maintain HOLD recommendation with TP of EUR 18 (prev. 19).

Vaisala - Outlook for 2019 disappoints

12.02.2019 | Earnings Flash

Vaisala had previously announced preliminary Q4 results, so the focus was on dividend proposal and outlook. The outlook guides for clearly lower EBIT than what we or consensus were expecting.

  • Dividend proposal is 0.58 (0.55 Evli / 0.58 consensus)
  • Business outlook for 2019: Vaisala estimates its full-year 2019 net sales to be in the range of EUR 380–400 million and its operating result (EBIT) to be in the range of EUR 25–35 million including EUR 10–12 million acquisition related amortization and one-off expenses related to a lease contract.
  • Our estimates for 2019E are net sales of EUR 387m (382m cons.) and EBIT of EUR 45m (46m cons.)

Vaisala - Positive profit warning

15.01.2019 | Preview

Vaisala issued a positive profit warning yesterday, with operating result being better than previously guided (EBIT range 30-36 MEUR). Operating profit for 2018 was 39 MEUR vs. 35.5 MEUR our estimates. Net sales for 2018 was 349 MEUR vs. 349 our estimate. W&E net sales in Q4 were 78 MEUR vs. 78 MEUR our estimates, IM net sales in Q4 were 31 MEUR vs. 30 MEUR our estimates. Most of the profitability beat was due to better than expected profitability in W&E, were EBIT was 10 MEUR vs. 5.2 MEUR our estimates (IM EBIT 6 MEUR vs. 5.5 MEUR our estimate).

Favorable mix in W&E and higher sales in IM impacted EBIT

In the fourth quarter 2018, operating result was higher than estimated due to higher than estimated gross profit and other operating income. In W&E, gross margin was higher than estimated due to favorable sales mix. In IM, net sales were higher than estimated resulting in higher operating result. Other operating income included EUR 1.5 million of reversal of earn-outs and other contractual liabilities related to acquisitions in the recent years.

2019E growth mainly non-organic, TP 19 and HOLD recommendation maintained

We estimate Vaisala’s net sales to grow 11% to 387 MEUR in 2019E. Growth is mainly driven by the Leosphere and K-Patents acquisitions (adding 24 MEUR and 12 MEUR to top line in 2019E). We estimate 2019E EBIT to be 45 MEUR. On our estimates Vaisala is trading at 2019/20E at P/E 20.4 and 17.9, which is ~17% higher than peer group. On our estimates, EV/EBIT multiples for 2019/20E are 14.5 and 12.8 respectively, which are in line with peer group. We await some more color from the Q4 call, especially regarding China and the W&E project outlook. We retain our HOLD recommendation and target price of 19 euros.

Vaisala - Leosphere and order intake reflect on W&E estimates

25.10.2018 | Company update

In Q3’18, Weather and Environment (W&E) order intake was y/y lower for the second consecutive quarter, partly due to the absence of large orders. Vaisala maintained its cautious view on the Chinese demand for traditional weather observation solutions during 2018. We have updated our estimates particularly for W&E. On our estimates, the positive net sales and EBIT margin impact of the recently acquired Leosphere is partly offset by more cautious growth estimates for the rest of W&E. We maintain HOLD rating with a TP EUR 19 (21).

Timing of W&E projects caused some surprises

After the Q2’18 result, Vaisala estimated that the high share of project revenue will negatively affect W&E’s profitability during H2’18. However, Q3’18 turned out to be an exception: the timing of W&E projects resulted in weaker net sales but supported gross margin and EBIT margin, as the share of typically low margin project deliveries fell to 25% (37% in Q3’17) in W&E. According to Vaisala, project gross margins also happened to be better y/y.

Low W&E order intake continued in Q3’18

In Q3’18, W&E order intake amounted to 48.7 MEUR (-33% y/y) which was the second consecutive weak quarter, even when we adjust for the 6.3 MEUR Vietnamese contract order in Q3’17. According to Vaisala, the demand for W&E products in China has not changed significantly from Q2’18 to Q3’18. The company repeated its view that the Chinese demand for traditional weather observation equipment is expected to decline moderately y/y in 2018. Vaisala sees that the main Chinese customer for traditional weather stations may have saturated its network, which could explain the weaker demand in 2018. Meanwhile, Vaisala sees that sales to Chinese airports are a growing business.

HOLD maintained with a TP of EUR 19 (21) per share

We have updated our estimates, which now reflect the acquired Leosphere. In addition, we lower W&E sales growth estimates for other segments due to the continued weak development in order intake and continued cautiousness regarding the Chinese market. In our estimates the weak W&E order intake partly offsets the estimated growth boost from Leosphere. Our 2019E estimates and peer EV/EBIT multiples imply a value of 18.8 EUR per share when we adjust for Vaisala’s net debt. We maintain HOLD rating with a target price of EUR 19 (21) per share.

Vaisala - Initiating coverage with HOLD

28.06.2018 | Company report

We estimate net sales to grow at a CAGR of 4.1% in 2018E-2020E, driven by Industrial Measurements and growth areas in Weather and Environment. Meanwhile, we estimate that improving sales mix and economies of scale raise Vaisala’s EBIT margin to 13.7% in 2020E. We initiate coverage with a HOLD rating and a target price of EUR 21 per share.

Industrial Measurements - Strong growth and profitability

In 2010-2017, Industrial Measurements (IM, 33% of sales) net sales grew at a CAGR of 8.2%. In the past five years, IM’s operating margin has improved from 12 to 20 percent, driven by scale economies. The business area follows a product leadership strategy and the current focus is on the power transmission and life sciences markets.

Weather and Environment – Focusing on growth areas

In 2010-2017, Weather and Environment (W&E, 67% of sales) net sales grew at a CAGR of 2.3%. Operating margin was 8.2% in 2017E. W&E is currently focusing on meteorological projects in developing countries, digital solutions, and air quality related solutions. Meanwhile, growth is relatively slow for traditional meteorological equipment in the developed countries.

Estimating EUR 376m sales, 13.7% EBIT margin in 2020E

Vaisala targets 5% CAGR sales growth (4.0% CAGR in 2010-2017) and 15% EBIT margin (12.3% in 2017) in the long term. We estimate 4.1% CAGR sales growth for 18E-20E, driven by IM sales and growth areas in W&E. We estimate that Vaisala’s EBIT margin improves to 13.7% in 2020E, driven by economies of scale and the increasing share of IM sales.

Initiating coverage with a HOLD rating and TP of EUR 21

Our 2019E estimates and peer EV/EBIT multiples imply a value of 20.4 EUR per share. Meanwhile, our DCF model implies a value of EUR 21.3 per share. We see that Vaisala’s current share price already reflects our expectations of continued growth and gradual profitability improvements. We initiate coverage with a HOLD rating and a target price of EUR 21 per share.

Vaisala Q319 video interview with CEO Kjell Forsén

Vaisala - Q3/19 video interview with CEO Kjell Forsén

27.11.2019
Vaisala company presentation 27082019

Vaisala - Company presentation

27.08.2019
ShareholdersDate% of shares% of votes
Currency: EUR
Price change in selected period:

These research reports have been prepared by Evli Research Partners Plc (“ERP” or “Evli Research”). ERP is a subsidiary of Evli Bank Plc.

None of the analysts contributing to this report, persons under their guardianship or corporations under their control have a position in the shares of the company or related securities. The date and time for any price of financial instruments mentioned in the recommendation refer to the previous trading day’s closing price(s) unless otherwise stated in the report. Each analyst responsible for the content of this report assures that the expressed views accurately reflect the personal views of each analyst on the covered companies and securities. Each analyst assures that (s)he has not been, nor are or will be, receiving direct or indirect compensation related to the specific recommendations or views contained in this report.

Companies in the Evli Group, affiliates or staff of companies in the Evli Group, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives) of any company mentioned in the publication or report. Neither ERP nor any company within the Evli Group have managed or co-managed a public offering of the company’s securities during the last 12 months prior to, received compensation for investment banking services from the company during the last 12 months prior to the publication of the research report.

ERP has signed an agreement with the issuer of the financial instruments mentioned in the recommendation, which includes production of research reports. This assignment has a limited economic and financial impact on ERP and/or Evli. Under the assignment ERP performs services including, but not limited to, arranging investor meetings or –events, investor relations communication advisory and production of research material. ERP or another company within the Evli Group does not have an agreement with the company to perform market making or liquidity providing services. For the prevention and avoidance of conflicts of interests with respect to this report, there is an information barrier (Chinese wall) between Investment Research and Corporate Finance units concerning unpublished investment banking services to the company. The remuneration of the analyst(s) is not tied directly or indirectly to investment banking transactions or other services performed by Evli Bank Plc or any company within Evli Group.

This report is provided and intended for informational purposes only and may not be used or considered under any circumstances as an offer to sell or buy any securities or as advice to trade any securities.

This report is based on sources ERP considers to be correct and reliable. The sources include information providers Reuters and Bloomberg, stock-exchange releases from the companies and other company news, Statistics Finland and articles in newspapers and magazines. However, ERP does not guarantee the materialization, correctness, accuracy or completeness of the information, opinions, estimates or forecasts expressed or implied in the report. In addition, circumstantial changes may have an influence on opinions and estimates presented in this report. The opinions and estimates presented are valid at the moment of their publication and they can be changed without a separate announcement. Neither ERP nor any company within the Evli Group are responsible for amending, correcting or updating any information, opinions or estimates contained in this report. Neither ERP nor any company within the Evli Group will compensate any direct or consequential loss caused by or derived from the use of the information represented in this publication.

All information published in this report is for the original recipient’s private and internal use only. ERP reserves all rights to the report. No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in any retrieval system of any nature, without the written permission of ERP.

This report or its copy may not be published or distributed in Australia, Canada, Hong Kong, Japan, New Zealand, Singapore or South Africa. The publication or distribution of this report in certain other jurisdictions may also be restricted by law. Persons into whose possession this report comes are required to inform themselves about and to observe any such restrictions.

Evli Bank Plc is not registered as a broker-dealer with the U. S. Securities and Exchange Commission (“SEC”), and it and its analysts are not subject to SEC rules on securities analysts’ certification as to the currency of their views reflected in the research report. Evli Bank is not a member of the Financial Industry Regulatory Authority (“FINRA”). It and its securities analysts are not subject to FINRA’s rules on Communications with the Public and Research Analysts and Research Reports and the attendant requirements for fairness, balance and disclosure of potential conflicts of interest. This research report is only being offered in U.S. by Auerbach Grayson & Company, LLC (Auerbach Grayson) to Major U.S. Institutional Investors and is not available to, and should not be used by, any U.S. person or entity that is not a Major U.S. Institutional Investor. Auerbach Grayson is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of the FINRA. U.S. entities seeking more information about any of the issuers or securities discussed in this report should contact Auerbach Grayson. The securities of non-U.S. issuers may not be registered with or subject to SEC reporting and other requirements.

ERP is not a supervised entity but its parent company Evli Bank Plc is supervised by the Finnish Financial Supervision Authority.

Vaisala company presentation 27082019

Video presentation

Company Facts

Guidance

2020 net sales between 370-405 MEUR  and EBIT between  34-46 MEUR (updated 21.4.2020)

Financial targets

For 2019-2023: Average annual growth above 5% and EBIT margin over 12%.

Share price (EUR)


Schedule analyst call

For professional investors wishing to discuss the case, please book a complimentary analyst call

Book call