Translation: Original published in Finnish on 10/12/2026 at 7:30 am EEST.

We expect Suominen to renew its bond in the coming months, and we raised our financing cost forecasts for the coming years. The share's earnings-based valuation remains very high, as in our estimates the company's net income turns slightly positive only in 2028. We reiterate our Reduce recommendation and lower our target price to EUR 0.6 (previously EUR 0.63) due to estimate revisions.

Bond refinancing in the near future

Suominen has a 50 MEUR bond maturing in June 2027. The loan carries a very low interest rate of 1.5%, as it was issued in the spring of 2021. We believe the company will seek to secure the refinancing of the loan later this year or, at the latest, immediately after the Q4 report early next year. We estimate that the company's primary goal will be to replace the bond with a new one. However, even after the share issue, the company's net debt/EBITDA is quite high (5x), and we expect it to remain at the 4-5x level for the coming quarters. We consider it possible that the company will arrange the refinancing in some other way as well, e.g., as a combination of a small hybrid loan and bank financing. Regardless of the form of financing, it is clear that the company's financing costs will rise significantly as a result of the refinancing.

We raised our financing cost estimates

We had already factored in the rising interest expenses to some extent in our forecasts from 2027 onwards. Taking into account the company's persistently high debt and rising interest rates, we have raised our financial expense estimates in this report by approximately 2 MEUR per year for 2027–2029. As a result, Suominen's net profit will remain only slightly positive in our estimates for 2028.

Suominen's result suffered to some extent from the increased raw material costs in Q2. We estimate that the company has been able to offset the increase in raw material costs in the spring and summer through price increases. However, the sharp rise in oil prices during September is driving raw material costs up during the remainder of the year, which we forecast to have a negative impact on Q4 earnings. We have therefore slightly lowered our forecasts for this year. We still forecast an adjusted EBITDA of ~15 MEUR for the full year, which, in line with the company's guidance, is an improvement from last year's weak level (12.6 MEUR).

We expect rising earnings in the coming years, but clearly below the company's target

We anticipate that Suominen will achieve a significant improvement in earnings in the coming years, bolstered by the efficiency program, though we doubt it will even come close to its 10% EBITDA margin target. Our adjusted EBITDA margin estimate for 2028-29 is 6-7%. This is because we believe the benefits of efficiency improvements will be passed at least partially on to customer prices, along with normal cost inflation. In the medium and long term, however, we still expect a higher margin level than in the next few years.

Elevated multiples, weak expected return

The share price is so high relative to earnings that it requires several years of strong earnings growth before the valuation is at a justified level (EV/EBIT somewhat neutral at 10x only in the 2030s). On our estimates, the company's EPS will not turn positive until 2028. Due to limited competitive advantages, we do not believe that the company can achieve a return on capital that sustainably exceeds the required return in the long term. This limits the stock's upside, even in a positive scenario. Our DCF model value is roughly in line with the target price. The DCF model assumes a significantly better margin for the company in the long term than the current one.