Digitalization is also advancing into industry, and Etteplan has comprehensive expertise ranging from mechanical design to electrical, automation, and software design (embedded, mobile…). In addition, they have 4G/5G expertise, which is important in the IoT world.
I don’t fully understand what is causing the rise in the past few weeks.
Apparently, Etteplan also uses Qt, or at least collaboration between Qt Group and Etteplan could be beneficial.
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Etteplan has been quite moderately valued in some respects this year. It’s a bit of a double-edged sword; it’s very labor-intensive, and on the other hand, investors’ perception of the company is very cyclical, like a machine shop. Everyone can then read the reports to see how things are. As for concrete valuation, the company’s free float is unfortunate, so there’s that. Valuation multiples are rising, so this is a really good company thanks to its growth, quality, and especially its management. Etteplan delivers what it promises, and in my opinion, it’s one of the most reliable companies on our stock exchange. And thus, the CEO is also at the top of my lists.
The business itself is too complex for me to fully understand, or even largely understand. My opinion, reflecting the aforementioned, is that one can paint Etteplan quite freely with a broad brush, however one likes and sees the company. In my opinion, Etteplan is now (after today) very neutrally priced for next year. It generates good return on capital, with good margins, and its segments support each other well. Etteplan’s investment story is, at least to my taste, excellent compared to its pricing and its industry; a well-managed, reliable growth company with an excellent track record on the M&A side.
Disclaimer: Etteplan is one of those “buy when it drops and is that price” cases that I missed from under five euros until today.
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I myself am very familiar with the area in which Etteplan operates. I have worked as a software architect not only in cloud solutions but also, in the past, in industry, automation programming, and embedded systems. Currently, cloud services, and especially SaaS, are in high demand during the digital transformation, but automation and digitalization are also increasing in industry. I intentionally bought Etteplan sometime in May, and now the return is 43%, which is quite good. I cannot directly find an explanation for the rise in the last couple of weeks. Corona has a greater impact on Etteplan’s business than on the business of many SaaS companies.
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Etteplan’s results will be a wonder again on Thursday! Here are my preliminary comments, on which basis I will evaluate the results: Etteplan Q3 torstaina: Kesäkausi on ollut vielä haastava - Inderes
It will be interesting to see how revenue has developed, as there are quite a few moving parts here. Q3 is seasonally weak, so there is less traditional “flexibility” in it, and new sales have been made, partly in challenging conditions. But of course, in this case, we are strongly looking to next year and what the earnings level could be then.
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Let’s put the initial reaction here too, as the conference is just starting:
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As I recall, the CEO said in the video that the situation and outlook will improve once the first coronavirus vaccine receives marketing authorization. Could private networks and 3D printing be the drivers of growth next year? Acquisitions are also (again) being eyed thanks to the strong cash position.
Well, I wasn’t really asked, but I’ll answer anyway.
I remember it that way myself, and that’s what we’re waiting for. It will certainly improve the situation, but there is still a lot of uncertainty regarding the economic outlook.
So far, the positive news about vaccine efficacy has not, to my understanding, led to clear positive development, but on the other hand, it has at least mitigated the negative effects of a strong second wave. That’s good in itself.
Etteplan has a lot of different drivers, but a single area rarely becomes significant on its own. That is both a strength (not dependent on a single technology but strongly diversified) and a weakness if one wanted to invest in a specific megatrend. Private networks are expected to provide support, and 3D printing is also moving forward. 3D printing was talked about more a few years ago, but it hasn’t become a major trend so far.
Acquisitions are very likely to continue next year, as they are an essential part of the strategy.
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Thanks for the answer. This Etteplan is a company where my “intuition” somehow tells me there are opportunities for anything, as it has many business areas, but on the other hand, I don’t believe it’s a rocket. When I sell, I still start to regret it, as it’s fundamentally a good company. So, let’s wait for next year in relatively positive spirits!
That positive earnings warning is nice. Let’s hope for good momentum next year!
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Tomorrow, the target price will likely increase. I predict 12.50. The digitalization of industry can rise just like SaaS, so I am ready to increase my own position.
In addition to electrical and mechanical design services for industry, there is expertise in embedded systems, mobile, cloud, 4G/5G, and more. Autonomy (various robots) and AI are areas I would invest in if I were Etteplan. Of course, also leveraging Qt.
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It’s a rather interesting and very understated driver that, due to the pandemic, many customers have downsized their product development departments to minimize fixed costs. Reluctance to rehire staff will likely continue as long as the COVID-19 experiences are remembered (a human’s memory, so 2 years?) and thus, there will be more use for companies like Etteplan, at least in the medium term.
Technological megatrends are giving Etteplan a pat on the back, yet the company is valued as if with multipliers for staffing agencies. Almost all players in technology-driven sectors and their subcontracting chains have already been pumped with multipliers well above pre-COVID peaks, but this one has somehow been left behind. In my view, the expected annual return is still in the 10-15% range, and it doesn’t even require any extraordinary performance.
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Well, nicely predicted! The report can be found here, but if you haven’t shelled out for Premium, the core message can be found in the morning comment.
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More interesting news from Etteplan.
Significant outsourcing deals have been a very important factor in Etteplan’s strong historical growth. This area has been a bit quieter in recent years, but this one is certainly essential. In my opinion, the growth in China, which is a very interesting long-term opportunity, is more significant than the revenue or profit contribution.
It doesn’t warrant any action regarding the recently updated outlook, but it’s an interesting piece of news for the long-term story 
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TekPartner A/S:
- turnover in 2019 was approximately eight million euros
- offices are located in Herlev and Odense, Denmark
- the company has 19 in-house experts + a network of various operators
(numerous international project partners + over 30 freelance designers operating in Denmark) - TekPartner is a primary product development partner for its clients, thanks to numerous areas of expertise related to its networked operating model (experience from hundreds of projects for over 200 clients)
- cooperation with Etteplan will initially begin in software and embedded systems
From TekPartner’s own website (https://tekpartner.eu/about-tekpartner), the following figures are available:
- 260+ customers
- 60+ full-time/contract employees
- 400+ local network of experts
- 1,600+ international network of experts
- 1000m2 R&D office and electronics laboratory near Copenhagen and Odense
- International Sales Department near Copenhagen and Amsterdam
=> other pages seem to contain more information: https://tekpartner.dk/iiot
Some financial data seems to be available here: Etteplan Denmark A/S | Virksomhedsprofil | eStatistik
annual reports for 2015-19 also seem to be available. E.g., 2019 (pdf): http://regnskaber.virk.dk/26327423/amNsb3VkczovLzAzLzRkLzExLzg4L2ZiLzY1NDMtNGVmYS1iYjY1LTRhODU4OGMzMmNkZA.pdf
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Etteplan has given several signs of market recovery. A positive earnings warning, followed by a recommendation to raise the target price for the stock to €12.50. After this, Kalmar outsourced its crane design in China to Etteplan. Significant effects on growth in the Chinese market. They acquired TekPartner, which performed very well in 2019, from Denmark. All this will affect growth already in Q1, and Etteplan has managed to carry out previous acquisitions excellently and profitably. The stock price is escaping the target. #Juha_Kinnunen
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Hey Tapsa,
Undeniably, things have been lively lately. Both with Etteplan and many other stocks. Etteplan, however, does have good news flow supporting it, as you mentioned. Some other stocks seem to be rising just for the joy of rising.
The stock has indeed risen above our target price, which, to my knowledge, is also the highest among analysts (Nordea, however, has a “fair value range”). I can’t comment further, as I naturally can’t comment on potential future updates in advance 
PS. Use the @-sign instead of the #-sign, so I get a notification of the tag. That way, you’re more likely to get a reply/comment if you’re looking for one.
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Yes, we are living in tricky times. Valuation levels are suddenly becoming questionable for almost everyone, now even for Etteplan. The image shows the price in relation to the 12-month rolling EBIT. You have to inflate forecasts or come up with new multipliers to keep the expected return very good.
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This morning, the view on Etteplan was updated. Here’s a link to the morning review comment:
As mentioned earlier in the thread, the news flow has been positive recently, but the stock has still flown considerably higher (> 40% in a month). At the same time, valuation multiples have been stretched sharply, and the stock’s valuation is practically higher than ever before.
On the other hand, the valuation of the stock’s peer group has also risen sharply, and Etteplan is not excessively priced relatively. It seems that the markets are very optimistic about the recovery of industry after the corona crisis – the slope coefficient in stock prices may also have been set steeper than in analysts’ forecasts. We’ll see what the truth is.
Etteplan is certainly in excellent condition, and with the strategy working, the outlook is at least encouraging. But it’s hard to shake the feeling that the atmosphere has become a bit too enthusiastic, and now we should digest the previous rise even in a good scenario. A cautious view was taken before the financial statements. In February, we’ll be wiser again.
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Etteplan Highlighted Positively on Stockopedia:
Further down there is a link to a more in-depth analysis, but it is behind a paywall.