Translation: Original published in Finnish on 9/12/2025 at 7:20 am EEST.

Puuilo's Q2 result was excellent once again, and the company announced ambitious new targets extending to 2030. Although we see conditions for long-term growth and value creation only getting stronger, we remain on the sidelines due to high valuation. We raise the target price to EUR 14.5 (was EUR 13.50) and reiterate our Reduce recommendation.

Continued quarters of strong growth

In Q2, Puuilo's revenue increased by 13% to 136 MEUR driven particularly by new stores. The number of customers also increased in both new and old stores, which indicates the competitiveness of the concept. Sales of private label products grew strongly (22%), improving the gross margin, while fixed costs developed roughly in line with revenue growth. Consequently, Q2's adjusted EBITA also increased significantly to 28.2 MEUR (Q2’24: 24.8 MEUR). These figures aligned with consensus expectations, though they slightly underperformed our own forecasts. The company reiterated its guidance for 2025, which indicates that revenue will be between 425 and 455 MEUR and adj. EBITA 70-80 MEUR. Following the report, we lowered our estimates for the current financial year marginally, expecting now sales to grow by 15% to 443 MEUR and EBITA to stand at 78 MEUR. 

Strategy update and new ambitious targets

The company updated its strategy for 2026–30, with the most significant new developments being an increase in store potential in Finland and the piloting of the concept in Sweden. We increased our longer-term estimates because the company provided well-founded reasons for opening 90 highly profitable Puuilo stores in the Finnish market, whereas the previous target was 70 stores. 

We view the Swedish market pilot as a positive option at this stage. The approach is very low risk, as the concept will be piloted with around 10 stores over the next 5 years. However, we have not yet made any precise forecasts for Sweden because the company has not disclosed specific opening dates for the first stores in our western neighbor.

Our longer-term projections are near new targets

We anticipate that the company will continue to grow strongly during 2025-2030. We now expect the company's revenue to rise to 770 MEUR in 2030 (previously 720 MEUR) and for the company to reach its targeted milestone of approximately 90 stores in Finland. We also project that the company will achieve an EBITA margin of 18% in its domestic market. Our estimates are close to the company's published targets for 2030 of 800 MEUR in revenue and a 17% EBITA margin. The success of expansion into Sweden is a big question mark at this stage, but if successful, the potential for long-term earnings growth beyond current levels will increase significantly. We are taking a cautious view of developments at this stage, as we believe that Sweden's contribution to earnings will only become significant in a positive scenario in the 2030s.

Expensive but by no means bubbly

With our 2025 estimates, the stock trades at 22x P/E and 18x IFRS 16 adj. EV/EBIT multiples. These levels are above our comfort zone, meaning that the around 17% earnings growth we forecast will largely be used to digest multiples. This leaves dividend yield (~5%/year) as the main factor supporting the expected return in the coming years. Even the positive option of expanding into Sweden does not yet prompt us to accumulate more shares. We consider Puuilo to be clearly the highest-quality company in its sector, generating strong value from its business operations, while the concept has also proven its defensiveness in various economic situations. Against this backdrop, appreciation is not bubbling, but rather, we would characterize it as neutral.