Doesn’t this look like an extremely cheap stock right now?
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This was added yesterday. I expect good Q3 earnings on 11/25/19 and for the share price to correct upwards.
Did IH issue a positive profit warning during Q4 because the company bought a significant premises property in Tikkurila? The company gave a “technical” EPRA negative in June when it had sold the Pori hotel property and a total of about 100 apartment units in Loviisa and Hämeenlinna.
In Q4 and H1/2020, Ovarot will likely be distributed. This will give IH a share price level that better matches the company’s profile when the junk leaves the balance sheet. According to Inderes’ estimate on August 20, 2019, “With the divestments, IH’s EPRA net asset value per share would decrease to approximately 7.2 euros (Q2’19: 7.9 euros).” So, within six months, a possible Ovaro dividend (return approx. 25%) and a cash dividend of an estimated 0.25e (4%) are expected.
Tikkurila’s properties probably won’t bring a positive earnings surprise yet, but they will allow for growth so Jesse can turn to the positive side.
Hopefully, they wait for Ovaro’s stock price to rise before distributing the shares. The balance sheet will take a hit if they distribute them now.
You might have to wait a long time for that…
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Another good result. A positive earnings surprise will come.
Still happy to be along for the ride and even significantly increased my holdings! 
Yes, a positive result should come. It only needs 665k€ in Q4. When Q3 was 731k€.
Roininen said during the Q3 announcement, among other things:
- He sees no risks for this year → would imply a positive earnings surprise
- The service business is on the balance sheet at acquisition cost.
I think Jesse will raise the target price tomorrow and lean more towards a buy recommendation, given the developments since the last update:
- New profitable growth coming (Tikkurila case)
- Service business has developed well (Clearly more valuable than book value)
- Real estate fund received marketing permit
- Ovaro’s situation/visibility/price has improved
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We turned to the buy side, but the target price only rose by 0.10 euros. I trust that once Ovarot has been distributed and the positive profit warning announced, we will see an increase in the stock’s level (in the long term). How much it will be and how long it will take, I dare not guess. On the other hand, as they say on the forum: time is on the side of good companies and against the others.
Looks good!
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Yesterday, Nordea published “commissioned equity research” which states that Investors House’s “fair value” is 5.7-9.5 euros. No recommendation or price was given. Overall, the text has a positive buzz.
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IH will distribute approximately 460,000 Ovaro shares in December. The ex-dividend date is December 10, 2019. After the distribution, the company will retain almost 2 million shares, and Ovaro will remain an associate company of Investors House. I started wondering why such a small portion of the shares is being distributed. Is there an accounting or similar reason for this? Presumably, the rest will be distributed in Q1. As I recall, this was mentioned in Inderes’ report, that not all shares would be distributed at once. So, in itself, the announcement was as expected.
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One reason behind it could be risk diversification. Ovaro has a significant 20 MEUR bond maturing next April, and there’s a risk that refinancing won’t succeed on reasonable terms, forcing Ovaro to resort to unfavorable, loss-making property sales to finance this loan => Ovaro’s share price would fall => IH would have to record an even larger accounting loss from the divestment of its Ovaro holding (which depends on Ovaro’s current share price level). By divesting a portion of Ovaro shares now, this risk is slightly reduced, and on the other hand, the possibility is maintained that if Ovaro’s share price rises in 2020, then the loss from the Ovaro divestment will be smaller.
Ovaro’s own share repurchases also support the share and at the same time IH’s distribution of Ovaro shares, which is a great gesture to all parties. For shareholders, IH and Ovaro. It will turn the company to a new growth in difficult terrain. IH risks will also decrease at the same time.
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Are those Ovarots being distributed as an extra dividend?
Watching these capital market days presentations reminds me of middle school. A bit uncertain and awkward. Not to say that I don’t believe the presenters are professional in their work. I’d rather take awkward presentations and increasing shareholder value than whatever Nokia and Suri tried to do.
They didn’t say it directly, but reading between the lines, I’d interpret that they are constantly thinking about the right moment to do so. They mentioned many times again how companies are in different stages.
If @Jesse_Kinnunen, you are making an updated report on IH, it would be interesting to hear what is planned with Ovaro in Q2 or H2. I have reserved a video link to the company meeting for Tuesday, if I can make it amidst other commitments.
That’s the end of it, I guess. I sold everything off in several parts after the earnings report. It seems to require a bit too much from a strategy that aims to allocate funds to multiple/best stages of a property’s life cycle. The company should have absolutely amazing experts. Maybe Investors House does, but I see more certain returns elsewhere. Still, I wouldn’t mind if it took off next week, for example. A sympathetic little shop.
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I understand your solution. I also considered selling after the earnings report. CEO Roininen said (honestly, thankfully) that COVID was not the reason for the weak Q1 result. There is a lot of operational improvement to be made from here on.
As an investor, I have been particularly disappointed that the remaining Ovaro shares have not yet been sold or distributed to shareholders. Furthermore, in my opinion, a notice about share repurchases should have been given immediately after the earnings report, and repurchases should have begun. The stock price is clearly below the EPRA NAV (Net Asset Value) and EPRA NRV (Net Reinstatement Value).
I myself considered selling, if the price hadn’t dropped from around 5.30€ to below five euros after the earnings report. We were already at the pain threshold at the crucial moment, and now I refuse to sell at this price.
Regarding the life-cycle model, I believe that a small company like IH likely has sufficiently agile expertise to act quickly for the benefit of shareholders. The stock itself doesn’t particularly interest anyone, so as a shareholder, I will continue to monitor the situation, given the current share price.
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