Aspo - EBIT to rise above EUR 40m next year

Aspo’s Q1 EBIT was soft relative to estimates, yet markets have now mostly stabilized; all three segments can improve organically but also with the help of recent investments.

ESL’s performance held up well despite many challenges

Aspo’s EUR 4.8m comparable Q1 EBIT fell short of the EUR 5.9m/6.3m Evli/cons estimates as there were EUR 3.7m in extra Q1 costs mostly due to the conditions ESL faced. ESL’s EUR 2.7m comparable EBIT hence would have remained quite flat y/y if there would not have been political strikes and extraordinarily icy winter conditions around the Bothnian Bay. The relatively strong underlying performance suggests ESL’s EBIT could improve by some EUR 5m already this year despite the headwinds (of which Q2 still faces EUR 0.5m). Telko was a bit soft relative to estimates, but its markets have stabilized and acquisitions will add a lot of potential towards next year. In our view all three segments now face relatively stable market conditions going forward.

Aspo’s EBIT has multiple strong drivers towards next year

EBIT now improves organically but also thanks to the green coasters and acquisitions by Telko. Telko’s two targets should add more than EUR 7m to EBIT by next year (without any synergies penciled in); we estimate Telko’s FY ’25 EBIT to gain EUR 6.8m. We estimate ESL FY ’24 comparable EBIT at EUR 23m, still a rather low figure as H1’24 bears some EUR 4m in extra burden; we see EBIT could improve by some EUR 4-5m next year (even when the Supramaxes will no longer be there to contribute ca. EUR 2-3m) as the new green coasters can be profitably employed for e.g. the cargoes of Metsä Group and Outokumpu. We estimate the latest investments and M&A will help (in addition to organic improvement) FY ’25 to gain EUR 12-13m as all three segments have solid potential for further gains. The organic development of Leipurin has recently added pace, and the latest Kebelco acquisition could help EBIT improve by at least another EUR 1m.

Valuation quite modest considering the earnings potential

We estimate FY ’24 comparable EBIT at EUR 34m, on which Aspo now trades some 10x, while we expect the figure to reach EUR 46m next year. On those estimates Aspo trades 7x EV/EBIT, which isn’t a demanding level especially when many segmental peers are valued well above 10x. We retain our EUR 7.0 TP and BUY rating.

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