Aspo — Low multiples amid mixed outlook
Equity research
Aspo reports Q2 results on Aug 18. Telko and Leipurin are on a steady track to improve more after last year, while ESL has such low H2 comparison figures that at least some further EBITA recovery should be seen already this year.
Guidance low-end not very demanding despite headwinds
Aspo’s Q1’25 EBITA topped expectations as ESL exited certain time-charter contracts which were making losses. ESL’s Q2 however faces somewhat higher comparison figures as steel industry demand was good a year ago, although it should also be noted the comparison period suffered from political strikes to the tune of EUR 0.5m while unusually heavy ice conditions continued until May last year in the northernmost part of Bothnian Bay. Last year was overall still very weak for ESL, so at least some earnings recovery is to be expected this year even if industrial demand outlook remains a bit muddied; general outlook for the year may have been brighter six months ago since the trade war is causing many investment project postponements, however we still think it very possible for Aspo to land near the midpoint of its FY’25 EBITA guidance range. We estimate Aspo Q2 EBITA at EUR 10.2m, up by almost EUR 3m y/y as we expect Telko to have improved considerably since M&A costs were no longer burdening its results.
In our view Aspo’s EBITA gains over all the quarters this year
We expect Leipurin EBITA to improve by some EUR 1m this year, while Telko should see its FY’25 EBITA gain by at least EUR 4m due to the low reported H1’24 earnings. ESL therefore continues to represent the biggest source of uncertainty. We estimate the shipping segment’s Q2 EBITA flat y/y as in our view the delta could basically go either way, yet H2 faces such low comparison figures that some additional improvement should be seen even if industrial demand headwinds have not completely subsided. ESL’s growth strategy relies especially on the industrial future of Northern Sweden, which has for a long time now been confirmed to receive many large-scale investments, and most recently there has been a lot of talk about data centers.
Low earnings multiples relative to segment peers
We estimate Aspo’s FY’25 EBITA to gain by EUR 12m, driven mostly by Telko in H1 and ESL in H2. This implies an EV/EBIT of 11x, while the multiple is about 9x on our FY’26 estimates. Our new TP is EUR 6.3 (6.0) as peer multiples indicate FV closer to EUR 7 per share. We retain BUY rating.
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Joonas Ilvonen
Analyst, Evli Research
+358 44 430 9071
joonas.ilvonen@evli.com
Name(s) of the analyst(s): Joonas Ilvonen
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