Continues in the renovation of Castings
A quick look at the annual report. Operating profit is negative, cash flow is positive, equity is approximately 30M, shares outstanding are 9.5M, order book was just over 10% of revenue, liquidity is okay, share is on a watchlist, no dividend apparently within 3-5 years, subsidiary Castings (Valimot) continues restructuring? The management team does not own shares, what is the impact of rising metal prices?
Looks good:
6 Likes
Componenta is definitely flying under the radar, and one would hope for analyst coverage for it. In a technical sense, a support level seems to have formed. Let’s hope the good momentum continues. I’m curious to see where we’ll be in a year.
I read the half-year review.
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Shares and Share Capital
Componenta Corporation’s share is quoted on Nasdaq Helsinki. The average share price during the review period was 3.49 euros (2.98 euros), the lowest price was 2.95 euros (2.24 euros), and the highest price was 4.60 euros (4.33 euros). The share price at the end of June was 3.34 euros (2.53 euros). The market value of the share capital at the end of the review period was 31.7 ME (16.6 ME) and the relative trading volume of the share during the review period was 33.7% (19.9%) of the share capital. Componenta Corporation’s share capital at the end of the review period was 1.0 ME (1.0 ME). The total number of company shares at the end of the review period was 9,492,444 (237,269,224). The number of shareholders at the end of the review period was 8,129 (7,723).
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The company had a share issue at the end of last year (2020), but the number of shares has decreased between the comparison periods? Has there been a share buyback at some point, or how is that possible?
The change in market value between the comparison periods is a bit concerning (31.7 ME (16.6 ME)), which raises the question of how justified the current valuation is at the current price.
In addition to the share issue, a reverse split of the company’s shares and a related redemption, whereby every fifty (50) shares of the company were combined into one (1) share, took place on December 18, 2020.
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This brings us to valuation. I’m trying to understand the company’s market cap and valuation.
In December, before the share issue, the share price was ~€3.06, now the valuation is ~€3.30. Last July, it was ~€2.56.
How was the market value smaller last July, even though there were significantly more shares?
I think I realized the answer to my own question while writing this, meaning that last July the valuation had strongly detached from the market value?
The old stock price has probably been adjusted for the reverse split.
So, a year ago, the share price would have been a few cents per share.
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It hasn’t gone up at all since the end of the restructuring, which I find surprising, and the H2 outlook is also better.
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https://www.componenta.com/sijoittajat/osakkeenomistajat/suurimmat-osakkeenomistajat/
Kyösti from number two just keeps buying more, even though he’s the largest owner! He trusts in the rise!
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Finally, this one is also experiencing economic growth. Just today I was wondering why it wasn’t succeeding when the economy is growing and the restructuring is over.
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Without knowing more about the company’s situation, I would guess that Wärtsilä (Wärre) and Valmet are now helping to boost growth. Fortunately, the Turkey ventures are now over.
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They have a clean slate after the restructuring ended in the spring.
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The corporate restructuring has been completed, and debts have been settled with funds from the share issue. Kakkoset and Etolat have recently joined with significant stakes (~12% & ~10%). While there isn’t a clear positive trend in EBITDA and revenue, there’s at least a small jump in the right direction. Revenue has grown to the extent of a positive earnings surprise.
Unfortunately, there’s not much information about who the customers are—customer segments are described at a high level, such as ‘agricultural machinery,’ etc. A quick Google search shows that Ponsse’s order books are full, and Valmet (a tractor manufacturer) has at least followed the index. So, there’s no information on whether these are Componenta’s customers, but they at least provide indications of the industry’s health. There are 6 open roles listed in job postings, three of which are plural, ‘CNC machinists’ 2x for both Kurikka and Jyväskylä, and ‘Foundry workers’ for Karkkila.
The interim and annual reports indicate that they are at least focusing on important matters such as sales and cost-efficiency. Increased raw material costs can eventually be passed on to prices with some delay through indexing agreements.
A new CEO took the helm in 2020. Unfortunately, the management team has little share ownership, and I couldn’t find information about what kind of incentive program (if any) is in place for management.
So, there’s no clear sign of a turnaround yet, but the shaky grounds mentioned above are enough for me to buy a slice.
Are there other owners on the forum? Opinions and insights on the company and its future prospects and risks?
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Here’s one owner who significantly increased their position after the positive earnings report.
Everything looks good to me right now except for the share price 
At least the cobbler has a reasonable ownership in the company.
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Kyösti of Kakkonen seems to be adding every month.
No wonder since he gave a positive earnings surprise.
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Clarification: The Group’s restructuring program has been completed, but the restructuring program of its subsidiary, Componenta Casting Oy, is still in effect until 2023. Componenta Casting accounts for half of the Group’s total revenue and employees. If Casting’s figures improve significantly from what was estimated in the restructuring program, naturally more will have to be paid back to creditors.
Casting’s survival of the restructuring program is marked as Componenta’s biggest risk.
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Componenta Oyj: Componenta Castings Oy Concludes Restructuring Program Early | Kauppalehti
That risk just disappeared. So, the biggest risk, in your opinion.
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Hello. I am an owner, and after years of following, I jumped on board when they raised money last year to pay off their renovation debts.
The only risk with the stock price is that someone might push it down multiple times below 3.20. The company is finally in the clear 
4 Likes
It’s hard to believe in such madness. I think 4eur will be permanently breached today.
Componenta’s subsidiary paid its debts | Kauppalehti
Now, if we get an earnings upgrade regarding operating profit by the end of the year, this stock will rocket.
1 Like