Aspo - Earnings gain from their lows
Aspo’s Q3 EUR 8.7m comparable EBITA didn’t quite reach estimates, but in our opinion there remain many drivers for Q4’24 as well as FY’25 EBITA gains.
Telko showed strong results, ESL needs to follow in Q4
Aspo’s EUR 8.7m comparable EBITA came in a bit soft vs the EUR 9.3m/9.6m Evli/cons. estimates as ESL’s EUR 3.8m figure was soft due to weak Coaster demand, in addition to which there were unusually high maintenance costs. Meanwhile Telko produced an EUR 4.6m EBITA figure even if there were still EUR 0.7m in M&A costs, which will no more burden Q4. Telko sales margins improved while volumes grew organically, in addition to M&A, and synergy potential hasn’t yet been fully realized. In our view Telko is thus already performing at EUR 20m annual EBITA run-rate; Q4 EBITA could have potential to improve further to around EUR 5m, although December is a somewhat slower month for the business. Aspo’s guidance suggests Q4 EBITA improves by at least roughly EUR 4m y/y; we estimate some EUR 5m y/y gain as we see both ESL and Telko should improve by around EUR 2m while Leipurin should achieve a gain of EUR 0.5m.
Earnings to gain in Q4 and next year, driven by ESL and Telko
ESL needs to improve in Q4, which is seasonally the best quarter. We estimate EUR 7.3m ESL Q4 EBITA, below the EUR 7.8m average of the last two such quarters. In our view this is a reasonable estimate as ESL’s results varied a lot in ‘22-23. We however make some downward revisions to our ESL estimates as Q3 figures were softer than we expected. We estimate EUR 26.8m ESL FY’25 EBITA, a gain of EUR 7m y/y, as the fleet gains more green Coasters while market demand will have room to improve especially in the forest industry. We estimate Telko FY’25 EBITA at EUR 20m, realistic in the light of Q3 performance and given the fact that volume and price trends are no more challenging, or at least have good potential to improve.
EBITA has growth potential due to low comparison figures
We estimate EUR 33m FY’24 EBITA, from which Aspo should still be able to improve by some EUR 14m next year due to mostly both ESL and Telko in roughly equal measures since this year’s comparison figures include soft stretches. Aspo is valued about 7x EV/EBITA on our FY’25 estimates, a level we don’t view very high. We retain our EUR 7.0 TP and BUY rating.