Talenom

The stock's valuation is now extremely attractive through a sum-of-the-parts analysis but realizing this will require not only Easor's listing but also profitability improvements in international operations. Nevertheless, we believe the risk/reward ratio is very attractive. 

While Talenom's Q3 report contained many positive aspects, such as a clear improvement in cash flow and strong development in Spain, it revealed that the problems in Sweden are long-term. This was reflected negatively in the earnings estimates for the coming years, the sum of the parts, and the target price. In the short term, risks are elevated as a negative profit warning remains possible, and the goodwill related to Sweden could be called into question. Talenom still has a lot of potential, particularly in Spain, and its valuation is not high in relation to this. Furthermore, the upcoming separation of Easor is a potential value driver.

The Q2 result was a disappointment as profitability in Finland weakened, but Sweden and Spain exceeded our low expectations. Forecasts for the coming years were under pressure as the software business progressed apparently slower than we had anticipated. Due to the earnings setback, there is also a profit warning risk for 2025. Following the downward revision of estimates, the valuation is also slightly higher, but without international losses, the share would still be cheap.