Aspo - Earnings are trending up
Aspo’s Q2 earnings were basically in line with estimates. H1 already showed some encouraging trends, and EBITA has room to improve over the course of H2 as well as next year.
Q2 EBITA gained y/y especially due to low comparison figures
Aspo’s EUR 154m revenue topped the EUR 142m/144m Evli/cons. estimates as ESL’s figure included the gain from a vessel transfer. The EUR 7.4m comparable EBITA was well in line with estimates as ESL’s EUR 6.1m figure topped the EUR 4.9m/5.0m Evli/cons. estimates while Telko’s EUR 1.8m comparable EBITA was burdened by EUR 1m in M&A costs as well as EUR 0.6m due to related inventory revaluations. Telko should thus be able to reach an annual EBITA rate of above EUR 15m quite soon as it now focuses on integrating the recent acquisitions. H1’24 earnings still weren’t that great, but the underlying performance suggests gains for H2 as certain headwinds and one-off costs will be there no more.
H2 faces low comparison figures with new capacity
The price outlooks of Telko and Leipurin have now reversed as the former’s environment was deflationary last year while the latter saw a period of raw materials inflation which has turned into a slight deflation. Telko’s outlook has been expected to stabilize and this year might still see price gains, although in general demand remains soft albeit improving. Aspo’s guidance suggests FY ‘24 EBITA will gain by at least EUR 4m y/y even if H1 earnings stayed flat; recovery relies especially on ESL’s H2, helped by low comparison figures but also the new vessels. We estimate Aspo H2 EBITA to increase by EUR 7m y/y mostly due to ESL while Telko integrates the recent targets. We expect the EBITA of both ESL and Telko to gain by ca. EUR 10m from their FY ’23 lows by the end of next year as they have invested in new capacity and M&A.
Recent investments add to earnings also next year
We continue to expect Aspo FY ’25 EBITA to gain by around EUR 15m y/y, more than half of which would be due to Telko as it has acquired some EUR 7.5m of EBIT this year (and added 40% to revenue). ESL shouldn’t find it too hard to gain by around EUR 4-5m in EBITA then as it will have received a few additional green coasters while the market could have improved a little more. Aspo is valued about 7x EV/EBIT on our FY ’25 estimates, which we view a rather low level. We retain our EUR 7.0 TP and BUY rating.