It was indeed a weaker-than-expected report. Although the reasons are mainly general market weakness and exchange rates, meaning the company itself should be in good shape. The main problems should disappear by next year at the latest, but on the other hand, everything usually takes longer than expected. However, the component shortage you mentioned might still become a significant problem. We’ll have to see if this is touched upon in the webcast. Otherwise, this looks quite attractive looking towards next year, but there’s a bagholder risk here, meaning it could crawl along for a long time.
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The CEO’s interview left a pretty good impression.
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In the US, demand has not decreased, but there’s a shortage of skilled workers, as US customers move factories back to their home country with Trump. So, is this just a temporary bottleneck that will resolve over time, rather than a lost market?
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The component shortage is due to large data center projects, but alternative suppliers are being explored/have been secured.
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According to the company, Q3 and H2 forecasts are more conservatively cautious than strictly necessary?
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In China, there’s fierce price competition, and small players might drop out/go bankrupt. However, DeeTee has a good position in China and a healthy cash flow. Even M&A opportunities? Margins are small in China, but volumes balance out the results there.
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India as a market has not yet properly taken off (not enough industry that would need DT’s products), but airport projects are awaiting approval from the administration, and potential customers from there.
Has DeeTee ever disclosed its order book? It would be nice to hear about the development and direction. Also, potential needs/desires for M&A in the future.
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In the interview with the man from Sotkamo was CEO Hannu Martola 
Topics:
00:00 Introduction
00:10 Q2 in a nutshell
00:38 Background of revenue decline and outlook going forward
05:13 Development of cost structure
06:29 Savings in Q3
06:59 Outlook for next year
08:35 Price competition in China
11:21 Industrial applications
12:23 Guidance for the rest of the year and outlook
13:57 Status of the Indian production facility
15:08 Main drivers in the medium term
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The interview felt a bit underwhelming. They’re kicking the can down the road until next year, waiting for better times.
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Juha Kinnunen has prepared a new company report on DT after Q2.
We revise Detection Technology’s (DT) target price to EUR 12.0 (previously EUR 13.0) and reiterate our ‘add’ recommendation. The Q2 result was already known to be weak, but 2025 has become a true path of suffering for DT, as the H2 outlook also deteriorated due to several setbacks. Despite everything, the outlook for 2026 is good, and in this respect, the stock is significantly undervalued. However, confidence in the company’s long-term sustainable performance is seriously being tested.
Quoted from the report:
Confidence will grow as the trend reverses and the geopolitical situation eventually calms down, but for now, the timeline for this is almost impossible to predict. The only positive takeaway from the Q2 review was, in fact, that in our view, nothing has permanently changed, and the outlook for 2026 is very encouraging.
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Evli lowered its target from 12e to 11e. It forecasts 0.48 EPS for this year.
If the case of Detection Technology is considered purely through historical figures, I believe there’s a fairly high probability that investors will be disappointed in the future. Inderes forecasts 11.9% revenue growth for next year and 10.3% growth for the year after. EPS would rise from this year’s €0.56 to €1.01 in two years. Excellent! This could indeed happen, or we could even exceed it, but we’ve seen that forecasting is difficult. This year was also supposed to see good growth, but instead, we got a decline.
A conservative investor sees that in 2019, revenue was €102.5M and adj. EPS was €0.92. There was COVID-19 in between, so it’s no wonder it dropped from there, but six years have already passed since 2019 when looking at the 2025 forecast. One would imagine a turnaround wouldn’t take this long. Evli’s revenue forecast for 2025 is €103.8M and EPS €0.48. Inderes’ is €102.6M and EPS €0.56. With what kind of premium compared to the rest of the market should a company be valued whose revenue has practically not grown at all since 2019 and whose EPS has roughly halved? Growth hasn’t even kept pace with inflation. The balance sheet gets a big plus and clearly increases its value, but still, P/E ratios around 20 seem quite high given past performance and a clearly difficult-to-predict business. Apparently, competition is also fierce (“In addition, fierce price competition in the Medical sector in China may also cause a longer-term challenge for the segment’s margins.”).
Certainly, a turnaround can happen, and suddenly we get growth, and P/E ratios melt away before our eyes, but my own assessment is that, given the risk, it should still be acquired for less than €10-12.
Quoting from Juha’s report: “DT guided for a single-digit decline in total revenue for Q3 and H2. This meant a reduction in guidance for Q3, as the company had still expected stable revenue in connection with the negative profit warning.” Indeed, the company itself cannot truly forecast very far ahead. How good a chance do analysts have, let alone us small investors, to estimate the figures for 2026 and 2027? Not very good, so a conservative investor cannot pay much then. For Buffett & Munger, this would go into the “too hard-pile”, but I myself am willing to take more risk if the expected return also feels good. It doesn’t feel that way yet.
If one is an industry expert or follows it closely, they certainly know more than the average person and can therefore potentially pay more. I sincerely hope that DT starts to rise from this, even if I wouldn’t benefit a single euro. All money flowing into Finland from abroad is very welcome.
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It’s also important to remember that not all problems have been in DeeTee’s hands. Primarily political hurdles in the EU, China, and India. Now, the reform in China is complete, and things have started to progress in the EU. So the market hasn’t collapsed; rather, we’ve had to wait for decisions to be made. Before, there was uncertainty about the pace at which decisions would progress. Now it’s known when the bottleneck will clear. Next year, the ball should be in DeeTee’s court to show what it’s capable of. If growth isn’t seen even then, it’s time to start criticizing the company.
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It is mentioned in the comprehensive report updated on 10.2.2025. I myself would rather see DT as a buyer with its cash than a seller 
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That’s exactly right. It has certainly been an extremely frustrating year for DT and surely for those who invested in it. At the turn of the year, the excel sheet didn’t show a halt to the CT revolution in the middle of a golden age, there was no USD/RMB collapse, no customer production transfers, no component problems, no customs chaos of this magnitude, and not many other headwinds. And through that, the forecasts went awry for us and presumably for the company as well. How much of this can be attributed to the company (and forecasters) and how much is bad luck, that’s the question… The end result is the same, however.
My own forecasts for next year are, in my opinion, completely realistic, but of course, they wouldn’t withstand a torrent of negative news either. But the CT revolution at airports will be carried out, and by all accounts, it should be at its busiest next year. If, and according to the company, since customers have not been lost and positions are unchanged, DT’s SBU should receive significant revenue streams from there, and high-margin ones at that. If performance elsewhere can be reasonable, then the pieces should be in a very good position. But they were supposed to be in a good position for this year too, and then all sorts of things happened. Still, the continuation of the CT revolution is, in my opinion, the primary driver, and there should be no more delays with regulators early next year.
Generally, it somehow feels that DT is currently under significantly more pressure in that value chain than before. This has never really been stable, but the fluctuations of the business units from one quarter to another are wild these days. Then component availability has come to the surface again. Is the market temporarily struggling amidst everything, or is this more of a structural change - again on the list of things to ponder.
We’ll see. I haven’t thrown in the towel, but the hammering is worrying. But if we happen to get strong tailwinds next year, the outcome could be very different.
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Juhan’s comments on DT’s change negotiations.
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Here are Juha’s comments on the results of DT’s change negotiations.
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Right, so I got beaten up when I tried to instill some faith in myself and fellow investors. April was beautiful and warm, maybe I got too much sun or something, but it wasn’t about terrace beers etc. when writing these observations.
Well, now the target price is 18→12 after only 7 months of the comprehensive report. H2 promises a decrease in revenue and, as an additional challenge, the good old component shortage. Over 10 years ago, the company was listed at 5.2 EUR per share; everyone who bought in the last nine years is at a loss, so one might think we are dealing with a real crisis company. Even now, the stock is being dumped daily to new lows at 9.6x levels. Of course, there are many more unpleasant examples of technology companies listing on the Helsinki Stock Exchange.
After watching the latest Heikkilä&Vilen, DT immediately came to mind, and whether this is truly laying the groundwork for a company buyout by the largest owners. All that’s missing now is Martola’s statement announcing that challenges continue/worsen → stock price -30% and a buyout offer at 9 euros.
Still, I can’t bring myself to believe they would go for such a deception. On the other hand, it makes me wonder why DT is not participating in the year’s main investment fair (Sijoittaja 2025), where dozens of companies want to meet their owners and attract new ones. DT has also not organized capital markets days, leaving the impression that they are not particularly eager to maintain contact with investors.
It still sounds like most of the mentioned setbacks are temporary, largely caused by authorities. Exchange rates affect everyone more or less, changing in one direction or another. New products and applications have been brought to market. A very interesting area is BH (quote from the comprehensive report below)
”Beyond Hardware”
DT’s offering has expanded from detectors to increasingly broader systems, and development is continuously shifting more towards software and various algorithms that, simply put, make detectors smarter. The company has long been able to offer readout electronics supporting digital signal processing (AD converters), integration of various subsystems, and ultimately comprehensive solutions for different areas. The company also has software development supporting raw data interpretation and algorithm development, especially related to multi-energy solutions. A good example of the expanding offering is the recently launched “all-in-one CT detector system” (press release in English). At the same time, DT has expanded its service offering with its myDT+ service portfolio, which includes application testing, customer support, training, and services related to storage and repair.
Software or algorithms have not been sold separately but have been ancillary to product-based comprehensive solutions. For this reason, for example, “software revenue” is very difficult to separate from the whole. In our understanding, about 50% of the company’s products contain “intelligence,” which makes them more competitive and thus their growth and
profitability profile is slightly better than other products. In our understanding, the share of these products is largest in industrial solutions. Generally, DT’s offering ends at the API interface, as customers consider the algorithms used for image formation and related factors to be their core competence. This is particularly clear in medicine.
Gradually, DT’s solutions are moving “beyond hardware,” but hardware-based solutions still remain at the core. We believe that the value in DT’s customer products is also increasingly shifting towards the “intelligence” of the devices. In time, machine learning and artificial intelligence will also become more prominent, which can rise to a significant role in the industry. At the same time, the lifespan of devices can be extended, as software updates can improve the device’s performance and features. By adding intelligence to products, the company can protect its margins against price erosion. In the future, the entire device (“hardware”) will probably not need to be replaced at the same time. An example is Tesla, whose cars’ “hardware” component changes slowly, but the cars still update frequently through software.
Now Martola and his staff should really pull themselves together and start actively developing a clear and positive company image towards investors. A bit of AI in the game and guidelines for the future offering, etc. This stock price decline is not in anyone’s interest.
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However, it is certainly better for the business and shareholders that Martola and partners focus on business development. If you want to invest in perceptions, I recommend checking out Summa Defence.
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Alright, things are finally starting to happen at airports 
”Dublin Airport is one of the few airports that have fully transitioned to new security screening equipment. The airport has acquired about thirty C3 security screening devices, which have been distributed across two terminals.”
This security business, I guess, was still a high-margin business, or at least higher compared to Medical.
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Here is a fresh company report from Juha on DeeTee.
We reiterate our Add recommendation for Detection Technology (DT) and revise our target price to EUR 11.0 (previously EUR 12.0). In our view, the upcoming Q3 report will still show weakness across the board, which put clear pressure on our 2025 forecasts. After this, earnings development should start to improve, and looking to next year, the outlook is still good in our opinion. In light of this, the valuation of the stock, which has been driven down, is already very attractive, but without concrete evidence of a turnaround or a calming of the geopolitical situation, bottom-fishing carries its own risks. From a timing perspective, the Q3 report could offer a better buying opportunity or, alternatively, a glimmer of light on the horizon, which could also support the risk-adjusted return expectation.
Quoted from the report:
Visibility for 2026 remains weak, but all drivers inherently point to at least a degree of improvement. If the company succeeds in achieving the earnings growth trajectory we forecast, the P/E adjusted for goodwill amortisation would be 12x and EV/EBITA approximately 8x based on 2026 forecasts. These would be extremely favourable for a growth company, and in our opinion, could offer an upside of 25-50%. Through this, significant compensation is already gained for bearing significant forecast risk. However, confidence will likely only grow once the trend reverses and the geopolitical situation at least calms down.
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Smith’s group reported at the end of September for the fiscal year ending 7/25. The group’s best performer was Smiths Detection, with aviation accounting for the lion’s share. As a system supplier, the split between new equipment/services is quite typically fifty-sixty. From a quick recollection, H1 aviation had grown over 30 percent and H2 just under 20. Slightly lower growth was predicted for the current H1/26. Roughly so. More detailed information can be found on SG’s investor pages.
In my opinion, the correlation between SD’s and DT’s airport stories (and figures) has been quite poor in recent quarters, which is why I haven’t bought into DT’s explanations. Of course, there are other system suppliers in the security sector. But still.
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An analyst positions DT as a growth company when the reality is that revenue is at 2019 levels and fluctuates wildly with economic cycles and geopolitics? Quite optimistic.
In my opinion, a company that repeatedly talks about growth but cannot demonstrate it should be valued without growth. P/E of 8-10 or similar with solid cash flow. The ability of these small domestic companies to compete and expand in global markets is more challenging than one might imagine.
(If I were Inderes, I would do a retrospective on cases like Tecnotree, Exel, Talenom, Solteq, Kamux, DT, etc. International expansion is surprisingly difficult without a significant competitive advantage and deep pockets.)
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Talenom’s case has been discussed at length and with great devotion in its own thread. The company’s and the analyst’s mistakes have been thoroughly reviewed. You can find it there if you scroll through my messages a bit. I have delved into that case more than any other ever.
A similar extensive review has not yet been done for DT, but so far, we have only been largely wrong for a year – and it has been a very exceptional year. Mistakes have been discussed in this thread as well, but the time for a broader review is later – or hopefully not at all.
I can’t say as precisely about the others, as they are not my cases – but we at Inderes do openly review these and try to learn from our mistakes. It’s part of our operating model, and I’d venture to say that we are the only players who also dissect their mistakes “publicly.”
When it comes to the failure of international expansion, we are certainly barking up the wrong tree with DT. DT has been international for at least its entire stock market history, and likely long before that, because Finland simply does not have sufficient markets for DT’s offerings. Finnish revenue was less than 4 MEUR in 2024, and in 2015 it was a couple of million. So, this whole story is built on international business, and it has nothing in common with, for example, Talenom’s internationalization story.
We completely agree that internationalization is difficult.
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These “airport stories” are not pulled out of thin air, as everyone can observe the regulatory changes and the chaos they cause. But I have noticed the same thing: Smiths Detection just keeps rolling out impressive numbers. On the other hand, SD claims to have a “strong multi-year order book” and presumably component inventories, meaning that subcontractor DT is not necessarily in the same demand situation as SD. This is true even if it were a significant customer (as we have estimated). There are sometimes drastic fluctuations in these chains, even if the “principal” rolls steadily forward. Furthermore, unfortunately, Smiths Group does not report segment (such as SD) orders and order books, so it’s hard to get a clear picture of the market at a given moment.
But Smiths is the main reason why I have recently often asked DT’s CEO if they have lost customers or their positions within customers. They say they haven’t, and I have believed that so far. In that case, as final products roll out, larger orders must eventually come from the value chain as well, relatively quickly by all accounts. If not, we are wrong either about the Smiths customer relationship or we have been tricked. But let’s see, I will try to clarify the matter further in connection with DT’s Q3.
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Even if customers haven’t been lost, it’s probably still possible, if not even probable in light of the numbers in this case, that market shares have been lost. For example, that SD has “chosen a third supplier for detectors” or “increased the share of another supplier,” etc.
This has been a bit of a rollercoaster for DT, and now a return to Q3/23 figures is apparently anticipated. Where, in terms of results, there seemed to be an improvement from Q3/22 figures, etc.
Price pressure is certainly high. Where could they find new added value, or have they fallen into a comfort trap in R&D? Since there’s money at the bottom of the chest, should they take a bit more risk instead of “submitting to a race to zero with the Chinese”? On the other hand, the experience in the company is probably more like having to constantly run faster just to stay in place.
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