Tecnotree: A vigorous investment phase ahead
Tecnotree's Q2 report came in below our estimate for net sales, but above for earnings. The company reiterated its guidance, but the uncertain operating environment is reflected in the company's order flow as customers postpone their investments to some extent. In the coming years, a critical part of Tecnotree's investment story will be how the company allocates the capital raised through convertible bonds, which it intends to allocate to M&A and product development, among other things. The risks of the stock are high, but at the current valuation the risk/reward ratio turns marginally positive in our view.