Bittium. What thoughts?

Stocks
1778

Would there be any chance, @Juha_Kinnunen, to arrange an interview with Chairman of the Board Veikkolainen? Because it seems quite clear that this company’s operations and “moving forward” are solely in his hands.

I would be interested to hear from the Chairman of the Board himself what the very conservative goals for the coming years are based on, given the current global situation? Are Bittium’s products just a “necessary evil” and acquired only if there’s money left after guns and cannons, or why doesn’t the company itself believe in greater growth? Or is it simply not believed that the company could grow internationally, meaning only the Finnish Defence Forces will handle larger orders in the future?

Furthermore, I’d be interested to hear what exactly has gone wrong in medical? Management, managers, and other personnel have been let go, device approvals are delayed, no continuation agreement has been made with the biggest client, and some new product launch was coming early in the year, but nothing has been heard about it either. Doesn’t the board take any responsibility for this, or is it difficult to take responsibility, as there hasn’t been a real Medical professional on the board for a long time, which is quite strange in itself?

Now, of course, a quite competent new person was brought into management, at least on paper, but does this also mean that we’ll have to wait a year for results?

Why did JW also get a sudden departure? Of course, this might be difficult to open up directly, but it just feels really strange to me that for once, we got a guy with the right attitude into leadership, who dared to cut costs, streamline operations, and otherwise (at least outwardly) things seemed to be working. Now, a “hometown boy” from Oulu / from the board comes in, and admittedly, in my eyes, the guy’s merits might not be at a level that he would be ready to jump into the leadership of a company your size, but it would be nice to hear why the board thinks this is the case?

Bittium is also one of the few domestic companies operating in the hot defense sector and listed on the stock exchange, but it seems that even some Finnish financial journalists don’t remember or know about the company’s existence, let alone private investors.
It’s certainly difficult when the company doesn’t publicly disclose much about its activities. I understand this, as the industry in which it operates is like that, but for goodness sake, not everything can always be so secret that nothing can be communicated externally?
So why doesn’t Bittium more actively market itself and communicate towards new potential investors?

There would probably be a whole A4 page worth of other questions, and I believe that others reading this forum would also have tough questions for Veikkolainen.

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1779

So why doesn’t Bittium more actively market and tell about itself to new potential investors?

What would such marketing to investors be? And what benefit would it have for the company’s business? In my opinion, the company should direct its limited resources towards potential customers.

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1780

Here’s a direct quote from Arvopaperi.fi today. The speaker is Nordea’s Senior Strategist Hertta Alava.

"Alava reminds that a large part of defense companies are not listed on the stock exchange. There are no companies in the sector on the Helsinki Stock Exchange. It’s primarily about the fact that defense companies in Finland are still relatively small. However, the situation can change.

I believe these companies could come to the stock exchange.”

If even Nordea’s Senior Strategist hasn’t heard of Bittium, does Bittium really not need to make more noise about what it’s doing?

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1781

Quite a strong conclusion from a single comment by one person.

So what more should Bittium do on a practical level? What is “making noise”?

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1782

Hi,

I can ask Veikkolainen if he’s willing to be interviewed. However, I’d consider this unlikely, as companies usually have clearly defined communication channels. Here, Communications Director Karoliina Malmi has participated in the discussion and answered questions - sometimes also with comments from the Chairman of the Board. Sometimes it feels like this excellent opportunity, in my opinion, isn’t really appreciated here - at least not by everyone.

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1783

I promised in an earlier comment that I would call Bittium this week. I called them on Wednesday, and that discussion did not offer a reason to change these original comments on the topic. The matter is, of course, still fresh, but at least for now, procurement processes or similar have not changed, nor have there been indications that they would change.

So, if significantly more is invested in defense in Europe in the future, then, of course, that is a very good thing for Bittium in the long run. In the short term, however, one should not expect miracles, because these procurement processes are long and time-consuming.

Here is my original comment:

And since there was feedback, you can also read the following to get a complete picture.

Apologies that this took a while, many balls in the air once again.

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1784

“Quite a strong conclusion from a single comment by one person.”

It’s not just one person, but Nordea’s senior strategist who analyzes stocks and invests money for a living, and who I would assume is also paid a very high salary for it. He should be considerably more knowledgeable about these matters than, for example, me.

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1785

Of course, it’s one person. He seems to be responsible for the tactical allocation of investments in Nordea Wealth Management. So he doesn’t follow individual stocks on the Helsinki Stock Exchange. Secondly, he might very well know Bittium, but the company just didn’t come to mind during the interview.

In my opinion, Bittium should still focus its efforts on business development. That creates long-term value for shareholders as well. A short-term price increase possibly resulting from pumping the stock does not.

For my part, this ‘yes-no’ discussion ends here. :handshake:

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1787

Exactly. Many don’t even think of the entire company, not even market professionals, let alone small investors.

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1788

Didn’t get an invite, did I?

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1789

A Nokia representative is found on the adjacent plot. We are living exciting times, my good friends.

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1790

If I’m identifying correctly now, it’s not Rautalinko either. So, is Patria’s representative someone else?

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When reading these, it inevitably comes to mind again that Bittium would fit quite nicely with Nokia now that they are very likely seriously developing this military side as there is demand for it. Nokia has, however, liked to make acquisitions, and Bittium would still be pretty much a “bite-sized” acquisition in terms of scale. What do experts think about this at a product level?

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1792

I have thought about this quite a lot, and I am skeptical. I suspect that if it were going to happen, it would have already happened. Instead, Nokia has turned its gaze to the United States and acquired Fenix Group - although it probably isn’t a competitor to Bittium. But as an acquisition and a “future direction,” I see it as a competitor in terms of where money and resources are allocated.

I don’t believe Nokia wants to enter the device side itself and own phones again - even if they were for the defense industry - and especially Nokia does not want to own health industry products again.

And of course, I could be wrong, and over time, thoughts can change through new people as well.

But in a way, why wouldn’t Nokia have already bought Bittium when its share price was €4 instead of the current €8.5. Nokia did indeed buy Fenix Group then. Of course, in Nokia’s scale, these are small amounts of money, but I believe it would have acted if it were interested.

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1793

Of course, buying isn’t possible if the seller doesn’t want to sell at that moment. However, Bittium’s NATO-standard qualification only came at the end of the year. Who knows, but the CEO’s departure makes one wonder if the board will make new moves or what? Now is the momentum for growth, if ever💎

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1794

Indeed, Bittium even started publicly reporting separately on Defence&Security, Medical, and Engineering Services, as well as ‘common’ functions.

Whether combining Nokia’s and Bittium’s Defence&Security would ultimately make sense or not - no comments - but let’s say that the structural readiness to sell parts of Bittium is a ready option through the reporting structure.

Unfortunately, defence has become a megatrend for at least the next decade, and within it, the modernization of warfare, including data-driven situational awareness, intelligence information, their utilization, and development monitoring, is likely an area within the megatrend that is somewhat newer and a bit underdeveloped in terms of utilization compared to its potential. Drones, etc., also multiply the amount of data.

So, I would think that the data/network aspects of the Defence side could well benefit from being a bit larger, more versatile, etc.

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1795

Hey Bittium folks, for how many millions are radios sold, if chargers are bought for a million?

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1796

Might as well put the link there.

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1797

Target: 6.8 → 7.8 € & Reduce

A lot of good is already priced in

Bittium’s share has risen by approximately 27% in a month, and at the same time, valuation multiples (2025e P/E 27x and EV/EBIT 25x) have been stretched considerably. We now estimate Bittium’s fair value to be 6.0-9.5 euros per share, where we have raised the upper end due to the improvement in the long-term outlook for defense. The value of the Defense & Security segment (EV ~220 MEUR) is already 79% of our sum-of-the-parts. In our opinion, this value already requires new breakthroughs in the sector, which are very possible in the coming years, but by no means certain. Through this, the stock’s risk/reward ratio remains subdued, even though the company has potential for a lot.

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1798

Defense & Security’s share of the sum of parts is already 79%, but I personally expect that the product development of the Medical segment will still bear fruit. The stock is still not suitable for the faint-hearted, as there is so much uncertainty about its development.

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