Aspo - Ready for earnings gains
Aspo’s results have seen ups and downs in recent years, but the stabilized environment and recent investments should now drive major earnings gains after a still soft H1’24.
Demand has stabilized while footprint has expanded
Aspo’s three business segments have all advanced in their strategic steps in recent years even if the respective market conditions of ESL Shipping and Telko did cause some volatility in their earnings. The dry bulk cargo market of ESL especially, and the chemicals distribution market of Telko to a lesser extent, saw major headwinds last year after a period of very high demand. The markets now seem to have stabilized around the summer of 2024 so that earnings can again grow on an organic basis. All three segments have also recently made some significant investments in new shipping capacity (ESL) and M&A (Telko and Leipurin). In our view the relatively stable market conditions, coupled with the capacity and Western geographical footprint expansions, now provide an excellent base for some earnings gains already this year as H2’24 doesn’t face very challenging comparison figures.
H2’24 and FY’25 face quite low comparison figures
H1’24 results were still burdened by somewhat extraordinary conditions in the case of ESL (political strikes in Finland and very severe ice conditions) while Telko’s M&A led to significant acquisitions related costs. H2’24 should be largely free of similar costs, in addition to which ESL’s demand should have already improved. We thus expect Aspo H2’24 EBITA to improve by some EUR 7m y/y mostly thanks to ESL. Comparison figures for FY’25 aren’t still that high due to the soft H1’24 while ESL continues to receive new capacity and Telko as well as Leipurin have had more time to integrate their latest acquisitions. We therefore estimate further earnings gains of some EUR 15m y/y for next year stemming from all segments but largely from Telko as it has acquired some EUR 7.5m of EBIT this year.
FY’25 EBITA gains turn valuation multiples attractive
We estimate FY’25 EBITA at EUR ca. 49m, on which Aspo is valued below 8x. On our FY’24 estimates the multiple is almost 11x, which can be seen as a rather neutral level. We view the current valuation attractive as earnings continue to have strong drivers towards next year. We retain our EUR 7.0 TP and BUY rating.