Translation: Original published in Finnish on 8/6/2026 at 9:28 am EEST.

We reiterate our Accumulate recommendation for Toivo, but lower our target price to EUR 1.15 (from EUR 1.20). Toivo's Q2 revenue and project initiations exceeded our expectations, but the result fell short of our forecast, weighed down by a small negative fair value change, a minority interest, and slightly softer project profitability. The company reiterated its guidance and commented that it is confident in the outlook for the rest of the year. We only slightly lowered our earnings estimates for the current year, as the strong project starts of ~60 MEUR in Q2 will also support the rest of the year, even though the lion's share of them are directed towards 2027. Supported by projects already underway, we estimate that next year will be good, especially considering the still very challenging new housing market situation. Toivo's performance has been strong in recent years in a difficult market, and we are confident in the earnings growth opportunities in the coming years as the housing market gradually improves. Relative to this, we find the company's valuation attractive (Q2'26: P/NAV 0.89x, PE 2026e-27e 16x-9x). 

Revenue and project initiations exceeded our expectations, but earnings fell short of our forecast

Toivo's Q2 revenue more than doubled to 24.5 MEUR (Q2'25: 11.6 MEUR), clearly exceeding our 21.8 MEUR estimate, as 128 apartments and two social infrastructure properties were completed during the quarter. Fluctuations between quarters are typical for Toivo, depending on the timing of revenue recognition and divestments. In our opinion, the most significant aspect of the quarter was the project launches totaling ~60 MEUR, which do not include the Gemma property in Kalasatama, Helsinki, where 32 out of 34 apartments were reserved immediately. Toivo's occupancy rate rose to 94.4% (Q2'25: 92.3%), and the company commented that it sees opportunities for rent increases in 2027, once the occupancy rate reaches 96-97%. Earnings, however, fell short of our expectations: EBIT was 1.8 MEUR (forecast: 2.7 MEUR; Q2'25: 1.5 MEUR), and the miss was explained by a negative fair value change (-0.6 MEUR), a large minority interest (0.39 MEUR), and slightly lower project profitability than our estimate. Thus, EPS was low at EUR 0.01 (forecast: EUR 0.03).

We made small forecast cuts for 2026, but strong starts provide solid support for next year

We slightly lowered our earnings estimates for the current year due to the Q2 miss, and our EPS estimate decreased more significantly due to a larger minority interest than we expected and increased interest expense forecasts following project starts. The company reiterated its guidance (revenue 65-85 MEUR, EBIT 6-11 MEUR), and based on H1 earnings, the pace is roughly in line with the lower end of the guidance, although the company commented that revenue recognition will again be weighted towards H2. We forecast revenue to be 81 MEUR and EBIT to be 7.7 MEUR. Our forecasts for 2027–2028 increased slightly, as the existing project portfolio already provides clear support for 2027, and we see upside potential in our volume forecasts if the company's strong sales momentum continues. The recovery of the housing market is still slow, but we believe there are small signs of a pick-up in the rental market.

Valuation is attractive relative to its earnings growth potential

We have estimated the fair value of Toivo's stock at EUR 0.78-1.35 (was EUR 0.81-1.48). The sum-of-the-parts valuation implies an upside of 49%, which indicates the company's potential if the positive trend continues. Toivo is valued below its net asset value per share (Q2'26: P/NAV 0.89x). At the current price, an investor can gain exposure to Toivo's property portfolio below its balance sheet valuation and get a high-quality development business thrown in for good measure. This is particularly relevant, in our opinion, as the company's development volumes have again risen to a good level. The investment outlook for the coming years and the development of the housing market are still subject to significant uncertainty due to Finland's weak economic situation and rising interest rates. However, the strong news flow, launched projects, and improved competitive position instill confidence in the earnings growth outlook for the coming years. Relative to this, we find the company's valuation attractive (Q2'26: P/NAV 0.89x, PE 2026e-27e 16x-9x).