VMP is listing, any interest?
The company published a prospectus that can be found via the links here (the pages didn’t actually open when I was posting this) https://www.inderes.fi/tiedotteet/vmp-oyj-julkaisee-finanssivalvonnan-hyvaksyman-suomenkielisen-listalleottoesitteen
Enersense gets a peer at least 
VMP is Varamiespalvelu, by the way.. ;D
Karo Hämäläinen has an interesting view on VMP. At some point, I started wondering why invest in a company that is so indebted and has high interest expenses. I couldn’t shake the thought that VMP’s listing seems more dictated by necessity. On the other hand, with a successful listing, the company gets funds to significantly reduce debts and interest expenses. Perhaps I’ll buy from the stock exchange when I know which direction the share price will start going.
Not hugely popular despite being oversubscribed: 1100 new owners…
VMP’s coverage has now begun on Inderes. Here’s a fresh, comprehensive report:
Growth in the HR services sector is slowing, and the importance of inorganic growth is emphasized in a consolidating yet fragmented industry:
VMP’s CEO, Juha Pesola, will be on ROAST tomorrow. Feel free to ask live questions (the more provocative, the better). The company hasn’t generated much discussion, and last autumn scared investors away from staffing agencies, judging by share prices. The company now has just over 1000 owners, which isn’t very many.
Let’s try to get some interesting angles out tomorrow 
Thanks Verneri and Inderes. Even though Juha got off relatively easy from the ROAST, it was a good overall presentation and gave more perspective on the company. And at least my own faith in the company was strengthened by Juha’s performance, which was smooth and knowledgeable. For some reason, I had just watched Fondia’s financial statement info a moment ago, and there is a night and day difference between these two, just as an example. Since it is once said that one should invest in a company with good management, at least VMP’s Juha convinced me, whether it was relevant in this investment case or not.
Thanks. There wasn’t really much to roast here, but perhaps the company, which has flown somewhat “under the radar,” gained more color and depth in the eyes of investors.
Bumping this thread, this one really is flying under the radar. Yesterday an announcement of cost-saving measures and today Inderes raised the target price. My own view has long been tantalizingly expectant. A company that is growing strongly, has a good market position, and operates profitably all the time, being able to pay dividends. All the classic signs of value growth for a stock, and yet someone is still selling their own out of their portfolio below the subscription price. In my opinion, it is definitely worth joining, there is a big chance in a few years to wonder how on earth you could buy this one so cheaply then.
Good point! I’ve also wondered about the lack of interest, having followed the company’s development closely.
Hopefully, there will be comments from the forum, maybe that would help to understand.
Good morning,
The Q1 report came out this morning, and after reading it, I am still satisfied with the company’s performance and future outlook. In my own calculations, I see a significant upside in the share price if growth continues, and since they clearly intend to keep costs in check, growing numbers will inevitably appear on the bottom line. The dividend is sure to grow from this year, and one could easily predict that growth will continue annually. I am still a bit puzzled as to why this particular company doesn’t attract interest from other investors? In my opinion, it’s hard to see VMP as being in any way a loser in its industry, so why doesn’t a company that is growing profitably and paying a growing dividend cause any buzz in discussions? Especially since the price is still low; we’ve only just returned to the IPO price, and the company has practically delivered on its promises from that time.
The monologue continues 
on Friday, a major integration was announced: VMP and Smile are merging, creating an operator with approximately 10% market share. The arrangement seems reasonable in its terms for both companies and their owners. Both companies are also continuing to grow independently before the merger, and the total revenue of the combined entity will exceed 300M. And I believe that the main owners of the new company will still want to maintain profitability at a good level. In the press conference, there was talk, among other things, about moving to the main list. So, profitable growth, increased recognition, and now one can already speak of a significantly large player in its field. I still have a feeling that this could become something even bigger, and you can still get in cheap.
By the way, we VMP owners will receive a nice autumn dividend before the merger 
I’m trying to get in, if I could grab a small slice for my portfolio at a reasonable price. If Petri gives an update on the stock tomorrow, there could be another big jump in the stock. On Friday, I didn’t have enough time to familiarize myself with the company, so I didn’t press the buy button.
Let’s bring the company into the spotlight again. When they move to the main list, visibility will automatically improve, but since things are still quiet here, I’ll try to stir things up and promote this case.
Looking back a bit, from my first post (March 26), the stock price has risen by about 30%, and we’ve received 8 cents in dividends on top of that. This fall, if (and when) the merger is approved, shareholders will receive an additional dividend of about 23 cents. So, this year’s dividend yield will be about 7.5% if you jumped in on March 26. At the current price, the extra dividend will still bring about a 4.5% return this fall.
The stock price increase has been quite good so far, but I don’t believe we’ve seen anything but the beginning yet; the company’s future value is, in my opinion, much greater than what the current price suggests. The new company will have just under 25 million shares. The combined LTV is over 300 million, and if profitability were to remain roughly at the current level (EBITA 8%), it would roughly mean €1 EBITDA per share. Compared to that, the current price of just over €5 is very cheap. Reflecting on the current valuation, the future value could be somewhere between €7-9, and when you add the synergies, potential savings, and new opportunities for sales growth, as well as the already mentioned move to the main list, I’m giving my target price of €8 by the end of 2020. So, esteemed fellow investors, come aboard, there’s room in the salon car. Petri can comment on whether I’m completely off track regarding the future
You could indeed get this for a reasonable price during the December sales.
Barometers show that the economic cycle is turning, and a recession will hit this company really hard, so I think that has been priced in to some extent.
This company also has no moat, and these staffing companies are popping up like mushrooms after rain.
I have this in my portfolio, and Smile’s CEO, who is taking over, is in my top five on the Finnish stock exchange.
PS. Could you change the VMP name to Smile completely at some point? For me, VMP still brings Varamiespalvelu (Temp Agency) to mind, because sometime 10+ years ago I was on their payroll, but for the younger generation, it means something completely different… Varamiespalvelu also sounds quite tired.
The stock has been heavily traded by board members in recent days, with only VMP on Inderes’ list, and purchased for just under 5M. What do the guys think about the future, up or down
If I remember correctly, an announcement about the new company’s goal and other things was promised for the autumn. While waiting for that, it’s good to still stock up at 5€, since the insiders also see it as reasonable.
https://www.inderes.fi/fi/tiedotteet/vmpn-ja-smilen-integraatio-etenee-0
The first announcement has now been made, and the company is targeting a total of EUR 5 million in synergies. This target is higher than we expected in our forecasts, as we have EUR 1.5 million in our forecasts for next year and EUR 3 million for 2021.
A second announcement is expected later this year, when the strategy and financial targets will be discussed in more detail.
I’m concerned about the mention of minorities included with Smile:
“A key risk to the rise of acceptable valuation is, among other things, the minorities that come with Smile, which will erode the bottom line of the income statement. Thus, the emergence of a low P/E-based valuation is conditional on the operational profit effectively flowing down to the very bottom line of the income statement.”
Regarding NoHo’s extensive information:
“Valuing minority holdings is extremely difficult because visibility into the development of individual restaurants is very poor. In addition, NoHo always uses shareholder agreements, which, in our understanding, fundamentally oblige minority owners to work for the company, and in dispute situations, they allow for a relatively low redemption price. In our understanding, minority-owned companies are generally heavily indebted to the parent company. NoHo charges interest on these loans, which thus dilutes the cash flow received by minority owners. Due to these factors, the value of minorities cannot be directly proportioned to their share of the company’s revenue.”
My questions:
Is it unclear what portion of Smile’s subsidiaries’ profit belongs to the shareholders? Is the share owned by these minorities known?
In the case of Smile, is it likely that the subsidiaries would be indebted to the parent company? What would be the impact of this on the shareholder?
I would think that if the subsidiary is indebted, wouldn’t the minority then be indebted to the shareholder/if the subsidiary is not indebted, then a part of the subsidiary’s profit belongs to the minority? Thus, the subsidiary’s indebtedness would be better for the shareholder? even if it sounds strange. Of course, it would be good to have the ability to repay debt.
Do minority holdings create problems in a situation where Vmp’s revenue starts to decline due to, for example, a macroeconomic slowdown, and the company decides to react to this, for example, by cutting costs?
Is the portion belonging to minorities deducted from “real” operational cash flow? In other words, if goodwill amortizations are an accounting expense, do minority shares genuinely cut, for example, Vmp’s opportunities for inorganic growth?
Good questions!
Here are the answers:
Although minority ownerships are known, it is very difficult to estimate the profit of an individual minority and thus the total burden these minorities place on VMP’s profit. However, the magnitude can be estimated, and there should be no big surprises from there in the future.
To my understanding, the subsidiaries do not have significant debt to the parent company. For follow-up questions: a subsidiary’s debt is not really the same thing as minority owners owing the parent company. Minorities practically only mean that Smile has owned less than 100% of a subsidiary and other owners own the rest of the shares. Part of the subsidiary’s profit does “belong” to the minorities, with the same logic as if you own shares in some company.
I do not see this matter as being dependent on the ownership structure of the subsidiary (i.e., whether the subsidiary has minority ownerships or not). The challenge is, in my opinion, the same regardless of the ownership structure.
Smile has had a majority stake in all subsidiaries, which means it practically calls the shots in these companies. In addition, the minority holdings are not so significant that they would substantially weaken the possibilities for inorganic growth.
In my opinion, these minorities as a whole are not a real problem, and their impact on the overall picture is relatively small. However, it is good for an investor to be aware of them.
Thanks for the replies!
Today at 10:19 AM, a trade of 70,000 units at a price of 5e
