@henrielo has visited Merus Power and below is a relatively comprehensive write-up about the company, or at least its recent updates.
Merus Power is clearly a growth company and, in terms of profitability, a potential turnaround company. A slight but insufficient earnings turnaround has been achieved. On the other hand, if the earnings turnaround and outlook were clear, the companyâs market value would be something other than less than 40 million euros.
Important groundwork has been done regarding both the new factory and personnel recruitment. Scale benefits can be gained from both if managed correctly.
Subheadings:
What is Merus Power and how has it developed?
Tuomala: âWe listen to the noise in the power gridâ
Significant emission reductions from the steel industry â a new factory in YlöjĂ€rvi
Changes in the customersâ market
Merus wants to profile itself as a system supplier
Can profitability improve significantly?
The text does not contain investment recommendations. The writer is a board member of the Central Uusimaa Shareholders (Keski-Uudenmaan OsakesÀÀstÀjÀt).
Thanks @Sijoittaja-alokas for actively sharing content. I corrected one of my own typos in the piece: back growth company â clear growth company. Good luck with your 2026!
Thanks henrielo, good write-up. Merus operates in a growth market and has also grown well. The challenge has been profitability and cash flow alongside growth and investments. As long as the company shows it generates enough EBITDA to secure financing for continued growth, I see a lot of potential as well. In recent months, sales by one large owner have also weighed on the share price. Itâs difficult to predict whether sales by large sellers will continue or if large buyers will be found. What the company can influence itself is sticking to the promised revenue growth for '25 and the promised EBITDA level. If they are able to grow profitably from '25 levels into '26 as well, this is already quite an interesting case.
Here is a fresh company report on Merus Power from Paul.
Merus Powerâs announced orders for 2025 do not support the continuation of rapid growth in the short term, which is why we cut our forecasts, especially for 2026. For now, relatively high valuation multiples and the challenging predictability of earnings weigh on the risk-reward ratio. In a favorable scenario, the situation could change as the companyâs profitability turnaround and the internationalization of the energy storage business progress. We reiterate our Reduce recommendation and lower the target price to EUR 4.5 following the forecast changes (prev. EUR 5.0).
This stock has low volume and a wide spread. The bid and ask run out quite quickly if someone decides to make any larger moves in either direction. For example, with purchases of less than âŹ10k, the share price could be pushed back up by that 7%.
I didnât expect such a significant order from Finland, at least not right at the start of the year.. 30% of the annual revenue before January is even wrapped up. If deals can be closed abroad, then revenue growth looks more than likely.
Could there be some technology-specific differences there? There are many types of batteries, and for example, if space or weight is not a factor, cheaper technologies can probably be used in the cells. Additionally, if a technology reaches the mass production stage, the price often drops quickly.
Furthermore, Iâve been thinking a bit about what it means for Merus if those promises from Donut lab get concrete confirmation during this year. Would customers be willing to order any older technology products anymore before those miracle cells are available for these mass solutions as well? Just the number of charge cycles promised by Donut is so astronomical compared to any current technology that it could put many companiesâ order books on ice until storage solutions with the new technology are available. Well, this is just theoretical speculation for now, pending independent confirmation.
Here are Pauliâs comments on Merusâs new order.
The new significant energy storage project improves visibility for revenue growth during 2026. Our growth estimate is quite moderate (6%) and there could be upward pressure, especially if the company receives more significant orders during H1. We also forecast that the company will be able to improve profitability through repetition and learning, although there may be downward pressure on the margin levels of energy storage projects due to the increase in the relative share of batteries. Although the order supports the growth outlook, we do not see a clear need for forecast changes for the time being. We will review the forecasts at the latest in connection with the financial statements release (published on Feb 5).
I was wondering the same thing. Could there be some difference in what exactly the order includes? Batteries / other components / infra / installation work / etc.
Perhaps Neve is handling a larger part of these themselves, and Merus has a smaller-than-usual slice of the total? For example, as an energy company, Neve might have its own staff and expertise to do some things themselves
Here are Pauliâs preview comments as Merus releases its results on February 5.
We estimate that revenue for H2 will be lower than in the comparison period, but will nevertheless grow strongly for the full year in line with the companyâs guidance. From the perspective of the investment case, it would be key for the company to be able to improve its profitability. Our EBITDA forecast is at the midpoint of the companyâs guidance range. Based on announced orders, we expect the company to guide for continued revenue growth and improving profitability for 2026 as well.
Revenue was 29.7 (29.2) million euros, growth 1.9%
EBITDA was 1.5 (2.6) million euros
Operating profit (EBIT) was 0.8 (2.0) million euros
Result for the period was 0.1 (1.7) million euros
Undiluted earnings per share was 0.01 (0.22) euros
Orders received were 23.3 (14.0) million euros, growth 66.9%
Revenue clearly exceeded Inderesâ expectations, but the result fell short.
Merus Powerâs H2 report was in line with expectations regarding key figures thanks to strong revenue, although the gross margin fell short of our expectations. Production has been made to function efficiently, and relatively large energy storage systems are already being delivered routinely, at least to the domestic market in Finland. The stockâs valuation relies on long-term earnings growth, which increases the valuation risk. However, we see that as the nascent earnings turnaround and internationalization progress continue, the expected return could become attractive. We are therefore raising our recommendation to Accumulate (prev. Reduce) and our target price to EUR 4.7 (prev. EUR 4.5).
