Let’s open a separate thread for Honkkis, even though things seem to be quiet on that front right now.
Has anyone looked into this more closely? I stumbled upon this tweet:
https://twitter.com/contra__capital/status/1160599071591141381?s=21
Great, glad Honkarakenne got its own thread!
The latest interim report was really good, especially the sales of log houses grew. The route to China has been opened.
One point in the government program was to support log construction as a response to climate change. Many schools and kindergartens need to be renovated due to indoor air problems, and wood construction is the answer to this.
In this sense, the trends are on the company’s side!
In addition, the Karstula factory is being modernized.
I myself thought about buying a small slice again on Thursday, payday.
If only this could be added to Inderes’ coverage!
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What’s been most concerning for a while now is the general economic cycle turning downwards and its impact on construction. But maybe due to the favorable trends mentioned above, it won’t affect this as much.
Additionally, as can be gathered from the first message, the stock is now quite cheap.
Where did the tweet author get the result of 2.7 million euros? In the 2018 annual report, the result was 1176 thousand euros, i.e., earnings per share 1176/5874=0.2.
The share price is now 2.3/0.2 = P/E 11.5.
It would seem at first glance that the balance sheet is on a healthy footing and the company is hardly a time bomb. Here, too, the order backlog is probably largely in the spotlight. Should I take a closer look…
The last 12 months’ result, i.e., 2019 H1 + 2018 H2.
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Exactly, this uses 12-month rolling actual results. Apparently, H2 2018 was stronger than the total 2018 result, meaning the company made a loss in the first half of 2018. Thanks!
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This year, several millions will be invested in the production lines of the Karstula factory. There must be light at the end of the tunnel if such actions are taken.
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The chairman of Honkarakenne’s board acquired 10,000 Honkarakenne shares today at a price of 2.33e.
These are always good signs!
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Today I sold my 2.89 Honka shares with a good profit.
It’s a great company with good products, but today’s 14% increase and over 20% for the week might not be fully justified in the current economic situation.
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Hi.
I jumped on board with Honkarakenne in mid-June this year, when I familiarized myself with Taaler’s Daycare Properties fund.
In my opinion, Honkarakenne has a good story. Finland is full of moldy daycares, schools, and nursing homes. I believe that parents would rather send their children to a new, healthy property than to a mold bomb, which creates pressure for change and, in my opinion, increases the demand for log daycares, among other things.
Time will tell how it goes 
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I agree, this is a really interesting and growing company of the future.
It would be really good to get this on Inderes’ radar, hint hint!!
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For your info, sauna industry news.
https://twitter.com/saunafromfinlan/status/1189191646421733381?s=21
Ping @Saapasjalkakissa
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https://www.inderes.fi/fi/tiedotteet/honkarakenne-nostaa-tulosohjaustaan-vuodelle-2019
Very positive earnings warning!!!
I read that as profitability having been better than expected, and if revenue is at the previous year’s level and profitability has risen slightly, then according to my calculations:
H219 EPS = €0.34/share
2019 EPS = €0.43/share
Share value then:
At a low P/E of 10x = €4.3/share
In my opinion, with this growth, a P/E of 12x would also be acceptable:
12x P/E = €5.2/share
So, there’s still room for upside!
Good performance!!!
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I, on the other hand, started thinking in a pessimistic way - when I was considering investing in the company; revenue was up 10% in the first half, and guidance keeps growth at zero, meaning that in H2, there will be a similar setback compared to the reference period.
On the other hand, profitability relatively improves as it would remain roughly the same compared to the reference.
Order backlog was down -10% in H1.
A lot of good buzz, but the worst undervaluation has been resolved.
E: Considering the company’s track record, it’s positive that the result significantly improves, this was already known after H1. In my opinion, it has received a bit too much attention, although I don’t comment on the timing?
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On the other hand, the megatrend of wood construction is just beginning, and Honka is a market leader with a very strong balance sheet. Major competitors have fallen (e.g., Mammuttihirsi), and entering the industry is not easy.
In the future, for example, kindergartens will be largely built from wood because cities are tired of indoor air problems. Large companies are also planning wooden headquarters for image and other reasons.
Honka’s free float is not very large, meaning Saarelainen and other insiders own about 40% of the shares, and now that CapMan has divested everything, there are no major sellers in sight.
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Today’s Kauppalehti had a generally positive article about Honka:
In addition, there was an article about competitor Honkamajat. It gives a pretty good market overview for log construction.
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Quoted from the Kauppalehti news, posted by @lee2sos:
The industry relies heavily on public construction. Schools and kindergartens are increasingly built from logs. However, large projects require financial resources and new expertise. Not all players have the capacity for this.
According to a survey by Construction Research RTS, a total of about 650 care and daycare centers and schools will be built in Finland in 2020–2021. According to a survey of municipal decision-makers, just over ten percent of these could be log or massive wood-framed buildings.
Honkarakenne may have a rather good starting point in this competition. Excerpt from Honkarakenne’s interim report:
The investment program launched in the latter half of 2018 continues until 2020, and during this time Honkarakenne will invest a total of 7.3 million euros in the development of its production. The investments to be implemented will streamline the factory’s production processes and increase the company’s capacity, especially in urban and project construction…
…The renewed production line is estimated to be in efficient production use in summer 2020.
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Honka has quite a trend supporting them, I wonder if Honka will ever build bigger apartment buildings? Currently, the biggest ones seem to be so-called townhouse apartment buildings, i.e., 2-3 stories high.
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Honkarakenne makes buildings from glued laminated timber. Wooden apartment buildings are mostly made from CLT elements, which require different machines and production lines. I don’t see log home builders venturing into apartment building construction anytime soon.
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