apologies, this clarification was left out of the interview. But this started in the latter half of last year, and if I remember correctly, the matter was first discussed as early as last summer. Behind this are massive data center investments that sucked up components from the market in huge volumes, for example, certain memory chips. These were used in DT’s products, especially in medicine (medical applications) if I recall correctly, and this caused difficulties for the company in component availability and, consequently, in deliveries.
DT decided last year to both make changes in the value chain and significantly increase inventory levels to ensure delivery capability. So, this doesn’t directly mean that revenue is about to explode (though it is growing), but rather that working capital relative to revenue will rise clearly, at least in the short term. DT has historically had availability issues with components (even significant ones during the post-pandemic boom), and now they want to ensure that new ones don’t arise. I don’t think they’ve necessarily thought about the application area (IBU, MBU, or SBU) per se, but rather the products and the components they require.
Since they have the cash, I don’t think this is a very big deal, but of course, the capital efficiency of the business model decreases if the level remains significantly higher in the long run. Currently, the best guess is that the increase will continue at least until the summer, but after that, it should start to normalize.
Hopefully, this answered your question to some extent.
Here is the company report from Juha on DT following Q1
Detection Technology’s (DT) Q1 result exceeded our expectations, particularly thanks to strong revenue growth. Profitability also developed positively, especially considering the continued soft sales mix. However, the guidance for the next two quarters only anticipates growth, whereas we expected double-digit growth. Consequently, our earnings forecasts were significantly lowered again. Due to the attractive valuation, we reiterate our Buy recommendation but lower our target price to EUR 12.0 (prev. EUR 13.5).
Quoted from the report:
The reduction in revenue growth forecasts impacts earnings forecasts with leverage, given the relatively high gross margins (approx. 45%) and an otherwise largely fixed cost structure. In terms of profitability, however, Q1 was encouraging, which somewhat cushioned the leverage effect. We now forecast full-year 2026 revenue to be around EUR 109 million and the EBITA margin to be around 11.5%. The company has previously stated that the targeted 15% EBITA margin is not realistic this year, but the margin will improve from the previous year (2025: 9.2%).
DT’s Q1 revenue was slightly higher than we estimated, while EBITA was in line. We make only small downward estimate revisions as Q2 outlook is a bit softer than we expected, but we continue to expect close to 10% growth for FY’26.
The stock is still stuck in a deep slump and just won’t start recovering… When I watched Martola’s interview on Inderes TV, I felt that his body language and communication seemed a bit defensive, and he didn’t appear very confident that the rest of the year would show good growth. It’s my largest position right now, but I’m a bit worried whether the company (and the market) knows something more, which is why we’re drifting downwards again this year and left waiting for the next.
Could Seligson be orchestrating a buyout of Ahlström from the stock exchange on their behalf?
Push the price down and then make a tender offer and buyout with a 30–40% premium. After that, with a few years of work to get the company’s key metrics and narrative in order, sell it at four times the price to some large international player.
Funds are once again the biggest sellers, along with one car dealership? And Toivanen’s interest didn’t last long either; took the dividends and dumped a large slice. On the other hand, private individuals have acquired over 10k shares. But yeah, it’s quite unbelievable that these are still being dumped at these prices. P/E, P/S, P/B are at ten-year lows, EPS growth forecast is tens of percent, and dividend yield is at ATH (in percentage terms). Practically everyone who has bought within the last 10 years is now in the red. CMD didn’t help, and Kinnunen’s views aren’t helping either.
Martola has some new concern in at least every other quarterly interview, which thwarts even the smallest attempts at a rally. If nothing else, his facial expressions or gestures arouse suspicion. Well, it’s the same story with Opto, Qt, Reve… i.e., those small caps whose rise has been awaited for years.
I just watched the latest Traders Club, where Jukka demonstrated that the earnings growth of US mega-caps is so strong that multiples (P/E) are quite moderate despite the ATH. Could it be that big money is fleeing there? Somehow, we need to get fund and pension company money into these small-cap techs. That likely requires even stronger earnings growth.
Hopefully, no redemption (buyout) happens. It would be nice to see an upward trend for at least a few years after the wars end. The drivers should certainly be in place.
The problem has been precisely that there hasn’t been earnings growth in recent years, despite earnings growth forecasts. The share price will certainly correct upwards if earnings growth begins to show year after year. I can promise you that will happen. It might not happen immediately if the markets are still skeptical based on just one year of growth, but if earnings grow systematically, I am 100% sure the share price will follow that development.
Why do we need to get any buying pressure from funds or pension companies? Do you think there needs to be some large entity to drive up the price so you can trade your shares to them at an inflated price? Of course, I understand the logic if one fears a cheap buyout from the stock exchange. A high price can keep buyout offers at bay. However, without a buyout, isn’t it just better if the big money stays away, giving a better opportunity to buy future cash flows more cheaply? One should still be able to estimate them within a sufficiently accurate range, and that isn’t quite easy. Nevertheless, if one plans to buy DT this year, it is surely better to add it to the portfolio below €9 than at €12.
