Helsinki 2024 Q2 - Week 2
Quick 2 sats
Clearly not investment advice, just tossing shit to the wall, and maybe it spurs some ideas for me.
Helsinki 2024 Q2 - Week 1
Clearly not investment advice, just tossing shit to the wall, and maybe it spurs some ideas for me. Nobody gives a flying fuck about Helsinki right now, which is precisely why my interest in it is growing. Maximum stupidity and gambling will eventually end, and suddenly, it is nice to own some companies that have strong balance sheets, good cash flows, mo…
Week 2
UPM 23.7
There are no surprises here, neither negative nor positive. I was hoping for at least some small positive surprises.
Comparable EBIT up 60% to 182 million, then you realize it is only 7.2% of sales…
Sales are flat at €2,546 million. Stagnation is the new growth.
UPM Paso de los Toros pulp mill reached full capacity. YEAH!
Operating cash flow plummeted to €204 million from €459 million. Something we need to monitor more closely!
The net debt to EBITDA ratio is at 1.64, up from 1.07. Still easily manageable, but we need to monitor this trend.
It was so sluggish because of the unusually high maintenance activity in Q2, which affected three pulp mills and all nuclear power plant units.
The stock price took the classic -5% nosedive after the results. I had my hooks under 30€ and got filled a little bit. I would not be surprised if the stock will continue to grind towards below 28,5€.
This has been the story for the last few years, starting in 2022: “The bottom is in, but it will get better soon.” Market fatigue with promises of future improvement…
UPM is still okay to buy for under 30€ and is certainly one of the best in Helsinki.
This is the only stock I own in Helsinki. Why?
I keep my tap dancing shoes on. What the fuck is happening here in the Finnish stock market.
UPM's diversified portfolio might weather economic storms better than pure-play competitors.
They're also investing in “sustainable” practices, which might pay off...
It shows resiliency. I need a pretty safe bet for my Helsinki bet, and the margin of safety is pretty good here.
+ Historically decent dividend
+ Cost management
+ Potential in biochemicals?
+ My home bias
+ Emotional attachment
Why bother with the stock if it barely beats the OMXH index? Can it even outperform cash? Do I expect it to beat the S&P500 in the long term? No. So why on earth do I keep holding this? Does it provide stability to my overall portfolio? Allows me to take risks elsewhere? Do I still believe in the long-term prospects of this one? No, I am not expecting explosive results from UPM. I still need to question if this is truly a great business or just “ok” if it is not great, then why own it?
Metso 24.7
I have been working on doing some deep dive on Metso, and my goal was to get it done with the Q2 results, but yeah, let's see, maybe autumn… Now you get my 2 sats.
“Challenging” Well the results are not pretty:
Orders received declined 14% to EUR 1,162 million
Sales declined 13% to EUR 1,214 million
Equipment orders saw a significant drop (-23%)
Services orders also declined, albeit less (-6%)
Positives:
Margins improved slightly, and cash flow increased; this is good news as the market continues to be “challenging.”
The company is positioning itself for future growth while navigating current market challenges. → I will continue my deep dive with this one. Is it a great business? I don’t know. The more I look at Metso's competitors…
From the CEO:
Minerals will gain momentum during the second half of the year, driven by favorable copper prices.
We are still poised for some “commodity supercycle” in the long run, but the road there will be messy. Think of “China supercycle 2000 - 2014”. Hence, Metso stays on my watchlist, and I continue to learn more about this business.
Vaisala 25.7
"Taking every measure for the planet." Strong growth in power and energy. Positive surprise: they beat the expectations. Hurray 🇫🇮
It is a lovely business. 52-wk high 44,70€. 52-wk low 30,30€, now trading at 44,50€
Orders received grew 14%
Net sales increased 13%
Improved profitability
Strong order book
Positive outlook
It would be awesome if Vaisala could grow its service and subscription sales. It's still pretty peanuts, but it's a huge opportunity.
From their job posting:
When stakes are high. Our solutions provide the most accurate and reliable measurements around the globe and on Mars. 28% of us work in R&D creating science-based innovations that endure the extremes. To stay ahead of the game, we invest around 13 % of our net sales in research and development.
Smart Factory team of five technology professionals. Together with the team, you will have an excellent opportunity to develop Vaisala’s Industry 5.0 capabilities.
The current valuation seems steep, but the current performance, future-focused initiatives, expanse to the software and service sales could suggest wonderful growth.
“Data-driven and climate-conscious world.” Can we dream with this one? Yes.
Let's add Vaisala to the watchlist.
Other observations from Helsinki so far.
My number 1 reason to invest in Helsinki:
Market Evolution:
2008: Moral hazard leading to financial crisis
Post-2008: Pure greed
Now: "Rug pull" era - "Everything is bad, but I just want to make a quick profit before it all falls apart."
Helsinki Market Specifics:
Insider shenanigans and unusual purchasing offers
Questionable reporting practices
Crypto-like behavior: Low liquidity, herd mentality, fundamentals overshadowed by price
Small cap liquidity crisis
Investment Challenges:
Difficulty in identifying "clean" companies
Deceptive market environment
Questionable investability for small investors
Global Risks for Finnish Companies: (I believe this is vastly underrated)
Increased protectionism
Geopolitical tensions
Sanctions and trade restrictions
Shipping disruptions
Currency volatility
Regulatory changes, especially in the EU
Outlook and Strategy:
Belief in the eventual return to common sense and fundamentals
Investment thesis: Focus on companies with strong balance sheets, good cash flows, moats, and transparent reporting
Acknowledgment of a potentially messy transition period
Keep an eye on this market for the long term. Remember, this "messiness" can create unique opportunities for patient investors.
Stay vigilant,
