contentSlug

type

ContentSlug_ContentQuery

slug

ContentPageContentQuery

content

trendingContent

query ContentSlug_ContentQuery(
  $contentSlug: String!
  $type: [ContentType!]
) {
  ...ContentPageContentQuery_13QmVO
}

fragment CompanyDetails_Content on Content {
  __isContent: __typename
  companies {
    name
    description
    pageUrl
    id
  }
}

fragment ContentBasicInfo on Content {
  __isContent: __typename
  id
  type
  title
  lang
  companies {
    viewerIsFollowing
    id
    name
    pageUrl
  }
  tags {
    viewerIsFollowing
    id
    name
    pageUrl
  }
  ...PublishingDetails
  ...Reactions
}

fragment ContentMetadata on Content {
  __isContent: __typename
  type
  title
  lang
  pageUrl
  alternatePageUrls: translations {
    __typename
    pageUrl
    lang
  }
  imgUrl
  description
  ... on Video {
    liveTime
    videoUrl
  }
  ... on Webcast {
    liveTime
    videoUrl
  }
}

fragment ContentPageContentQuery_13QmVO on Query {
  content(slug: $contentSlug, type: $type) {
    __typename
    id
    type
    title
    isPremium
    lang
    htmlBody
    summary
    companies {
      forum {
        latestPosts {
          ...ForumPosts
        }
      }
      name
      id
      viewerIsFollowing
      pageUrl
      defaultInstrument {
        isin
        id
        marketOpen
        marketClose
        marketplace {
          region
        }
        returns {
          total
        }
      }
    }
    tags {
      viewerIsFollowing
      id
      name
      pageUrl
    }
    createdAt
    ... on Video {
      liveTime
    }
    ... on Webcast {
      liveTime
    }
    slug
    ... on CompanyReport {
      reportUrl
    }
    ... on ThirdPartyCompanyReport {
      reportUrl
    }
    ... on StockExchangeRelease {
      reportUrl
    }
    ...ContentBasicInfo
    ...ContentMetadata
    ...PriceAndRecommendation_Content
    ...CompanyDetails_Content
    ...ReportLink_Content
    ...KeyFigures_Content
  }
  ...TrendingContent_1jQ2Cn
}

fragment ForumPosts on ForumPost {
  text
  likesCount
  url
  author
  postedAt
  authorImgUrl
}

fragment KeyFigures_Content on Content {
  __isContent: __typename
  companies {
    defaultInstrument {
      estimateData {
        modelType
        reportingCurrency
      }
      snapshot {
        transaction {
          date
          actualized {
            year
            quarter
            revenue
            revenueGrowth
            ebitAdjusted
            ebitReported
            ebitda
            enterpriseValue
            epsAdjusted
            dividend
            dividendYield
            sharePrice
          }
          estimates {
            year
            quarter
            revenue
            revenueGrowth
            ebitAdjusted
            ebitReported
            ebitda
            enterpriseValue
            epsAdjusted
            dividend
            dividendYield
            sharePrice
          }
        }
      }
      id
    }
    id
  }
}

fragment PriceAndRecommendation_Content on Content {
  __isContent: __typename
  createdAt
  companies {
    name
    pageUrl
    defaultInstrument {
      priceData {
        tradeCurrency
      }
      snapshot {
        priceData {
          date
          lastPrice
          tradeCurrency
        }
        transaction {
          date
          recommendation
          targetPrice
        }
        prevTransaction {
          recommendation
        }
      }
      id
    }
    id
  }
}

fragment PublishingDetails on Content {
  __isContent: __typename
  createdAt
  publishers {
    name
    imgUrl
  }
  authors {
    __typename
    id
    name
    slug
    imgUrl
    jobTitle
  }
  ... on Video {
    liveTime
  }
  ... on Webcast {
    liveTime
  }
}

fragment Reactions on Content {
  __isContent: __typename
  id
  reactionGroups {
    reactionType
    reactionsCount
    viewerReacted
  }
}

fragment ReportLink_Content on Content {
  __isContent: __typename
  type
  isPremium
  ... on CompanyReport {
    reportUrl
  }
  ... on ThirdPartyCompanyReport {
    reportUrl
  }
  ... on StockExchangeRelease {
    reportUrl
  }
}

fragment TrendingContent_1jQ2Cn on Query {
  trendingContent(type: ARTICLE) {
    __typename
    id
    title
    lang
    pageUrl
    createdAt
    type
    imgUrl
    companies {
      squareLogoUrl
      name
      id
    }
    authors {
      __typename
      imgUrl
      id
    }
    publishers {
      imgUrl
    }
  }
}


__typename

title

isPremium

lang

htmlBody

summary

companies

createdAt

publishers

authors

reactionGroups

pageUrl

translations

imgUrl

description

Head of Research

Antti Viljakainen

Valmet supplies technologies, automation and lifecycle services to process industries globally, including pulp, paper and energy. The company operates globally and supports customers from initial capital equipment delivery through decades of operation. Its business model is based on a large installed base, long-term customer relationships and recurring services.

Inderes              Tavoitehinnan ja suosituksen tulkinta - Inderes    Hei, Kiitos mainiosta analyysityöstänne ja videoista. Voisitteko tarkentaa, mitä tavoitehinta oikeastaan tarkoittaa? Onko se taso, jolla osakkeeseen kohdistuva lisää, vähennä tms. suositus kannattaa toteuttaa analyytikon arvion mukaan? Kurssitaso voi...                             If you want to understand a company’s potential, for example by 2030, you need to form a view of 1) earnings per share in 2030, 2) the valuation multiple in 2030, and 3) what kind of dividend the company will pay in the coming years. Point 1) is especially affected by revenue growth and profitability.

Valmet is a pleasant company to follow in the sense that the company shares quite clear data, even over the longer term.  For example, in the latest interim report, you can find the order intake for several years:  Or a graph of revenue going back more than a decade:  But if we reflect on, for example, Inderes’ forecasts, the targets:  So Valmet targets a 15% comparable EBITA in profitability.  In Inderes’ forecast table, we see EBITDA%, EBIT%, and comparable EBIT%. We get close, but we need to compare blood oranges to oranges.  Valmet’s target 4 years from now is 15% comparable EBITA ↔ in Inderes’ 2028 forecasts EBITDA%=15.3, EBIT%(adj)=12.8, and EBIT%=11.7. To my eye, it seems that according to Inderes’ forecasts, Valmet is at least very close to its targets regarding profitability. A similar situation is reached with return on capital. Inderes’ data has ROE and ROI, which in the 2028 forecasts are ROE=15.7% and ROI=17.5%.  Valmet wants to use a 20% comparable return on capital employed before taxes. I understand that Valmet cannot directly influence taxes and that reflects better the business performance, but the first thought is still that the figure sugarcoats the truth when talking about “before taxes” return and even “adjusted”. Then there’s revenue growth, where Valmet’s 5% CAGR target is easily exceeded in Inderes’ 2026 forecasts, and as a CAGR figure even with next year’s growth, we are ABOVE Valmet’s targets. Only in 2028 in Inderes’ forecasts does Valmet fall below its targets. If we return to Valmet as an investment, when looking at consensus forecasts:   Basic good? Pretty nice performance, and the stock market can always get excited and start pricing in growth, quality, higher multiples, capital moving from US tech to Finnish engineering companies, etc. etc.  But you have to believe in very strong performance for the stock to be any kind of screaming buy and no-brainer investment.

Valmet’s targets include 5% organic growth. Over the last three years, Valmet has made three significant acquisitions that have increased/are increasing net sales by an average of approximately EUR 235 million per year, representing 4.4% annual net sales growth. It is likely that acquisitions will continue during the strategy period, even though they are not modeled in current analyses. If they do not continue, funds will accumulate on the balance sheet for future acquisitions.

I would like to clarify that our forecasts are quite clearly below Valmet’s target levels across practically the entire forecast horizon. In the current forecasts (excluding the acquisition of Severn Group), growth exceeds the 5% target (CAGR) in only one year. In 2030, the EBITA margin remains just over 1% and the ROCE % about 2% below Valmet’s 2030 targets, which are 15% for the former parameter and 20% for the latter. In these respects, the targets are not exceeded in our current forecasts in any single year. Valmet’s targets are indeed ambitious, and achieving our forecasts also requires sustainable improvements on both the commercial side and in cost management.

It would help if short positions were unwound, they have indeed already decreased during the year https://shortregister.com/fi/valmet-oyj-valmt

To my eyes, Valmet’s valuation is at a ‘meh’ or ‘pretty nice’ level.  If you use Wärtsilä or Konecranes as peers, for example, then Valmet is certainly valued quite modestly, as those guys have skyrocketed to ridiculous prices. Still, that doesn’t make Valmet a screaming buy target. Valmet has a lot of expertise, a global presence, scale, plenty of recurring business, etc. It’s not a bad company, and the stock could perform very well.  The business looks good if you extrapolate the future with a ruler.  Valmet has a lot of recurring business, but a large part of the business is non-recurring. Competitors will try to push their own solutions into every deal, and cost-conscious customers will consider whether they can do things themselves. Valmet is cyclical to some extent, and the Valmet share price easily follows the rest of the market up or down. The US economy is chugging along with a deficit of over 6%, and China has plenty of its own problems. The global economy is being disrupted by many leaders, while at the same time, stock markets are at ATH. In Valmet, you accumulate a fair amount of China risk, both regarding Valmet’s own operations and customer demand.  Valmet just went through a couple of change negotiations (muutosneuvottelut) and reduced its workforce. You can always trim costs, but it didn’t sound like sales are booming. Assuming Valmet reaches its financial targets and Inderes’ forecasts materialize as they are, the stock would likely provide a nice return.  Based on my own experience, ~90% of the time, targets are set to be somewhat achievable, but ultimately they are missed, and 90% of surprises are negative, causing companies to underperform forecasts. Even now, the 2028 forecasts are roughly at the same level as Valmet’s ambitious targets for 2030. Looking at Valmet’s stock, I’d estimate roughly a 5% dividend yield annually and then ~3% growth over time → 8% p.a. return, which is a very typical stock market return.  The stock may fluctuate, and the company might over- or underperform, but from current levels, I see index-level returns over the longer term.

Valmet looks cheap:  One would think people are aware of the company’s familiar risks and threats, or is there some not-so-familiar problem existing and/or known that we small-time Helsinki investors don’t grasp. The risks are and have been these larger projects (e.g. Brazil project), the familiar “problem” is cyclicality, then the depression in the forest sector, which has already been discussed quite extensively. Earnings growth is in the cards and there’s nothing to complain about regarding the dividend; furthermore, there hasn’t been anything to complain about in the order backlog so far. The company’s valuation is not “Valmet-like,” even though Valmet is doing quite well. I don’t have a deep understanding of the company’s products, but I’ve gathered from reading here and there that the company is an innovative and high-quality player that might have opportunities to get even nicer numbers on the bottom lines relative to growth as well. However, as a counterbalance to cyclicality, Valmet also has a high-quality steady stream provided by, among others, the Flow Control side (ex-Neles). Has World War III been priced specifically into Valmet’s stock, or what are some of the big players seeing that we small Helsinki investors don’t understand? Has anything changed since this company report from the end of October?   Well… and the actions of the relatively new CEO might start to show more strongly (hopefully positively )…  …and additionally, if I remember correctly, students enjoy working at Valmet, e.g. Valmet has been chosen as the third most ideal employer among engineering students in Finland, and according to my understanding, so do more experienced experts. The future is in good hands (?).

Valmet

We find the overall picture of Valmet’s Q1 report neutral, even though there was strong discord in the businesses, especially in terms of orders and demand outlook. 


<p>We find the overall picture of Valmet&rsquo;s Q1 report neutral, even though there was strong discord in the businesses, especially in terms of orders and demand outlook. However, we prefer to see the glass as half full, as the stable businesses that are important for Valmet's result and value develop at least reasonably, which compensates for the headwind caused by the weakness of the device businesses' orders and order outlook, especially for next year. After the report, the decreases in earnings forecasts were minor at Group level. We believe that the upside in Valmet's low valuation and the good dividend yield of nearly 6% still generate a higher expected return than the required return on a one-year scope.</p>

	2023	24e	25e
Revenue	5,532.0	5,423.5	5,267.2
growth-%	9.0 %	-2.0 %	-2.9 %
EBIT (adj.)	598.0	593.5	611.0
EBIT-% (adj.)	10.8 %	10.9 %	11.6 %
EPS (adj.)	2.31	2.19	2.30
Dividend	1.35	1.40	1.45
Dividend %	5.2 %	4.8 %	5.0 %
P/E (adj.)	11.3	13.3	12.7
EV/EBITDA	8.4	8.5	7.9

The glass is half full

Key Estimate Figures08.02.2024

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