After a severe profit warning, KH Group’s Q2 report was a relief, as it confirmed that the deteriorating performance was solely due to the extremely poor performance of the Group’s source of grief, Indoor Group.

On Friday, KH Group revised its guidance for the current year for a second time, referring to Indoor’s poor performance and sending a message about really weak Q2 figures. We cut our estimates especially for indoor Group, but also slightly for KH-Koneet.

The purchase price for HTJ seems good and will offset KH Group's balance sheet concerns. The announced M&A transaction contributes to the investment story of building a comprehensive business around KH-Kone and allows for more reliance on KH-Kone in the valuation.

KH Group's Q1 report was weak as expected, but the figures were still below our updated forecasts after the profit warning.

On Tuesday, KH Group significantly lowered its earnings guidance for the current year, citing lower-than-expected revenue and EBIT of Indoor Group and KH-Koneet, mainly for Q1. In our Q4 update, we were skeptical about the very strong and surprisingly precise guidance the company issued in March, but the 25% decline at the midpoint of the guidance was still disappointing to us.