Relais: Wheels likely to continue rolling along familiar tracks

Translation: Original published in Finnish on 9/24/2025 at 7:00 pm EEST.

Now that Relais' equity-based financing solution is secured, the focus shifts to the appointment of a new CEO, which is expected to occur soon, as well as updated financial targets and strategy. While we estimate that the company's strategy and value creation model will remain unchanged, we believe that the new financial targets will measure value creation more directly than before. We reiterate our target price of EUR 18.5 for this moderately valued stock and our Buy recommendation.

Hybrid bond issuance added to our estimates

Relais recently announced the issuance of a 50 MEUR hybrid bond, the proceeds of which will be used primarily to repay the bridge loan taken out in connection with the TVH acquisition. The fixed interest rate of the hybrid bond is set at 7.875% for the next four years, and after the interest adjustment day (09'2029), the interest rate will float. We have included the hybrid loan in our estimates, and we have also reviewed depreciation levels for the coming years after the company published pro forma figures reflecting the more precise effects of the completed acquisitions on Relais' balance sheet. Reflecting these estimate changes, our adjusted earnings per share estimates for the coming years decreased by 4-7%.

Leverage at a moderate level

According to our estimates, with the hybrid bond, Relais' net debt (based on Q2'25 figures and excluding IFRS16 liabilities) will decrease to around 110 MEUR, taking into account the Wetteri acquisition, which is also included in our estimates already. This corresponds to around 2.4x of our 2026 EBITA estimate, which is a rather moderate level. Thus, the continuously strengthening financial position through cash flow enables complementary add-on acquisitions even in the short term. However, we estimate that the company will focus on strategy work and integrating the already-announced acquisitions in the short term.

Familiar themes and new targets in strategy

Relais’ business model for value creation, and thus its current strategy, has largely relied on acquisitions in the Nordic countries and developing its owned businesses. We expect the new strategy to follow this same concept because there is still room for the company to grow in the Nordic countries and its current operations provide a solid foundation for additional acquisitions. Therefore, we do not expect any fundamental changes to the company’s strategy. Instead, we believe financial targets will be based on metrics examining value creation and growth rate rather than absolute revenue or earnings metrics. These could include, for example, metrics measuring return on capital or relative annual (earnings) growth. We believe that the board's intention is for the company to appoint a new CEO to replace Ekholm, who is retiring in the spring, before finalizing the strategy and objectives. We anticipate that the CEO selection process, which has been ongoing since spring, will conclude in the near future.

Valuation is moderate on multiple measures

According to our forecasts, the adjusted P/E ratios for 2025-2026 are about 13x and 11x, and the corresponding adjusted EV/EBITA multiples are 11x and 10x. In our view, the valuation multiples for next year, which fully reflect the acquisitions made and are therefore more relevant, are quite reasonable and have upside, considering Relais' business operations quality and the company's track record in capital allocation. Relatively, Relais is valued roughly in line with companies engaged in similar operational businesses, whereas compared to serial acquirers, the valuation is at a significant discount. In our opinion, Relais' justified valuation lies somewhere between these two peer groups. Thus, relative valuation supports our view of a moderate valuation level, as does our cash flow model, which is above the current share price.