Good morning to the thread!
Finally, we have initiated coverage on Framery!
We started with a target price of 8.5 euros and an Accumulate (lisää) recommendation.
We didn’t manage to catch the dip, but despite the recent share price rise, I think you can still get on board the story at a reasonable price. Normalizing orders from a major key account, coming down from an exceptionally high level, are expected to weigh on the company’s reported performance over a one-year horizon. However, during that time, I will personally focus more closely on the development of the rest of the customer base and, through that, the development of the company’s competitiveness. Personally, I believe that the new generation of pods launched in 2024 supports the company’s competitiveness, at least for the coming years (nominal prices were kept unchanged in the new generation, even though product quality and functionalities were improved).
Despite strong growth, the investment story also combines a generous profit distribution, where the distribution policy even flirts slightly with share buybacks. At the company’s ITF (Inderes Toy Factory) event, I questioned the heavy dividend distribution instead of more aggressive growth investments, but sparring with the management convinced me that it is not worth expanding the value chain position into more capital-intensive operations, where more capital could theoretically be sunk. One investment angle for the Framery story would, of course, be acquiring a smaller product house and scaling sales through Framery’s global distribution network, but I personally favor capital distribution over forced M&A deals.
In the report, I perhaps spent a bit too much space on the company’s services (pod rentals and smart office SaaS services), which are still in their infancy. However, these will play a key role in maintaining the company’s growth potential over the next 10 years. For now, Framery has an estimated 20% share of the pod market, so there, the company’s growth will inevitably approach the market growth rate.