Talenom: Value will be realized upon demerger

Translation: Original published in Finnish on 12/1/2025 at 8:00 am EET.

We reiterate our EUR 3.8 target price for Talenom and raise our recommendation directly to Buy (was Reduce) after the sharp decline in the share price. We have not made any material forecast changes and the risk of a profit warning is still clear, but we believe financing concerns have eased as the demerger has progressed. The stock's valuation is now extremely attractive through a sum-of-the-parts analysis but realizing this will require not only Easor's listing but also profitability improvements in international operations. Nevertheless, we believe the risk/reward ratio is very attractive. 

The stock has fallen despite encouraging news flow

Talenom's share price has fallen by 16% since our last update, even though the news flow related to the company has, in our opinion, been mostly encouraging since the Q3 report. The company's board decided to pay the second dividend installment in full, and the company also made a small acquisition in Spain, so the company is clearly not as concerned about balance sheet sustainability and indebtedness. One reason may also be the progress of the demerger, which clarifies the company's financial structure and places the majority of the debt burden on the accounting business, which generates growing cash flow. At the same time, the demerger and change process may also ease the write-down pressure related to the Swedish business, which, however, together with a possible profit warning, remains a clear short-term risk. The recent selling pressure may also be partly explained by "portfolio cleaning" of underperforming stocks before the turn of the year.

Country-specific breakdown of the accounting firm business

We directly cut the Easor software business from the Finnish business figures, which gave us an estimate of the country-specific figures for the accounting business. We estimate that Finnish accounting firms will generate an EBIT of some 12.2 MEUR on revenue of around 69 MEUR this year, which would imply a margin of 17.6%. Profitability is thus strong, and the business also generates abundant cash flow. This is a very valuable (estimated at around 170 MEUR) accounting business.

Instead, the Swedish business has so far destroyed shareholder value. Before a clear turnaround, investors are unlikely to give the business any value. In our view, the business would be acquired at a low value despite its current weak state, so it must also be given a value in the sum-of-parts (EV 11 MEUR). In our opinion, Sweden is the clearest reason why the market does not accept a valuation approaching the sum of the parts.

In Spain, revenue could grow to around 20 MEUR next year (forecast includes acquisitions), and although EBIT is negative, EBITDA is already clearly positive. The valuation is complicated by the country's own software (under Easor), which is still invoiced separately. This way, revenue is not directly transferred to Easor, but this has been taken into account in the invoicing of services. Thus, part of the value may transfer to Easor as invoicing is separated, which would weaken the key figures of the accounting business. Due to the good growth outlook and large market potential, we accept a 1.5x EV/S multiple for Spain based on the 2026 forecast, which would imply an enterprise value of approximately 30 MEUR. We will disregard the small Italian business at this stage.

The demerger should unlock the hidden sum-of-the-parts value

Considering the demerger, our updated sum-of-the-parts analysis indicates a value of around EUR 4.8 per share, of which EUR 2.9 is tentatively allocated to the accounting firm business and around EUR 1.9 to Easor (currently EV 100 MEUR, to be specified after the listing prospectus). In our view, this value will not materialize before the turnaround in Sweden, strong development in Spain, and Easor proving its profitable growth. The discount should narrow as investors' attention shifts to the companies created by the demerger. The still high valuation multiples at the group level are gradually approaching the value indicated by the sum-of-the-parts, as loss-making businesses no longer weigh on the whole.