For the 2020 fiscal year, EBIT was over 15%, and even if you attribute that to the COVID-19 lockdown, for the 2019 fiscal year, EBIT was over 11%. So I wouldn’t call it modest when compared to the average on the Helsinki stock exchange. I also wouldn’t call the growth modest; rather, it’s moderate.
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Well, soon you’ll have the opportunity to get in on the growth; I’ve personally seen a few plastics companies rise and fall, but you can’t lump all companies together, so all the best to Orthex in the future.
Initially interested, but the final interest depends on the pricing.
This is a welcome addition to the stock exchange, there are few consumer goods manufacturers on the Helsinki Stock Exchange. I will consider participating when the final price is determined.
Good profitability, successful acquisitions, and high cash conversion are undeniably attractive.
In addition, one could assume that the business is also quite defensive, as it involves basic consumer goods.
Of course, the drop in oil prices combined with the home-nesting trend has certainly provided a better-than-average annual result, but if one looks at the 2019 figures and draws conclusions from them, the company still appears quite appealing.
One interesting aspect is also the brand, which could be one of Orthex’s strengths.
After a quick glance in the store, I didn’t find a single “made in China” label; every single Orthex brand product had a large “made in Finland” stamp, and similarly, Gastromax and Smartstore products prominently displayed “made in Sweden.”
If one compares, for example, the Gastromax brand to its competitor Fiskars, Fiskars has quite a lot of Chinese goods with a higher price tag.
What do you think, how much do consumers in Finland/Nordic countries/Europe value products produced there compared to Chinese ones?
I personally believe that with that Nordic identity, a strong brand could certainly be built, and profitability could be increased. Why else would manufacturers of consumer goods need to write “design in Finland” or something similar on their products, trying to paint a picture away from Chinese industry?
The IPO price, of course, will decide, but the target is undeniably interesting.
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“How much do you estimate consumers in Finland/Nordic countries/Europe value products made there compared to Chinese products?”
Here are the thoughts of one individual consumer. I’ve bought quite a few self-watering pots from Orthex. They’re not very cheap; a small pot costs about 5 euros nowadays. The prices have clearly risen over the years, I’ve noticed that. These are available in all stores: Tokmanni, Cittari, Prisma. Unfortunately, for some reason, competing self-watering pots are not available. I would much rather buy a Chinese pot that’s half the price, but they aren’t available. It’s not a big deal, Orthex products are quite good, but they’re not among the cheapest.
I don’t see that Orthex has any particular competitive advantage over other companies in the same field. There just isn’t always an alternative in stores. If I had to come up with something, it would be 1. high-quality products, 2. environmentally friendly products (I don’t know if everything is made from recycled plastic, but at least some are), 3. strong market penetration (available in almost all stores), 4. the brand is quite well-known in Finland. There are a few.
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Orthex itself communicated somewhere that shipping light and bulky products from the other side of the globe is not profitable.
For my part, I have a somewhat mixed feeling about this. The products are high quality and a pleasure to use, and it’s also nice that they are domestic and environmental friendliness has been taken into account. But where is the growth story hiding? What exciting things does Orthex intend and is able to do to create value for the owner?
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In Finland and the Nordic countries, a significantly large portion of plastic is also recycled. That might also have an effect. But it’s likely a sum of many things why this conclusion was reached. Good pondering, nonetheless.
{“content”:“Especially when storing food, I prefer domestic plastic containers over some cheap Chinese imitations. Plastic is not the most ecological material, but good containers are safe, last a long time, and help reduce food waste by keeping food usable longer. They are excellent and reasonably priced as refrigerator and freezer containers. Similarly, for many other storage needs—e.g., tools, toys, and storage requiring absolute watertightness—lightweight, high-quality plastic lasts for decades compared to boxes made of many other materials that would have broken down many times over. Ecology comes from that. For example, our nice fabric-covered cardboard-framed toy boxes lasted neatly for a couple of months until the younger one decided to sit on their edges. Of course, materials replacing plastic are developing, but I believe Orthex will do well in that sector too.\n\nI don’t expect the stock to be a rocket, but there could be good starting points for a decent defensive investment.”,“target_locale”:“en”}
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Why do you necessarily need a growth story or exciting things? I, for one, hope that this will become a reasonably priced company that, with its boring, stable business, generates consistent, reliable profits year after year. Thus, shareholder value would come from the company providing a reasonable dividend yield on invested capital. Ultimately, the shareholder value of even those growth rockets comes from discounted future cash flows/dividends. The time horizon, associated risks, and thus the discount rates, might just be a little different.
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I dabble a bit in stock populism, and I’m wondering if Orthex could pull a “Harvia.” Meaning, it profiles itself during the listing as a moderately growing, stable, brand company that pays good dividends. Then, after the listing, it starts growing at a new rate, acquiring companies, and conquering new markets.
Both companies are strong in Finland and the Nordics; the question is whether Orthex can expand abroad after listing, like Harvia did.
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Verneri interviews Alexander (CEO)
Orthex has also opened company pages: Orthex - osake - Inderes
March 15th Webinar for Orthex Orthex suunnittelee listautumista Nasdaq Helsingin pörssilistalle. <br>Tutustu yhtiöön webinaarissa 15.3.2021 klo 18.30! (will it be on InderesTV @Yu_Gong)
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At least those freezer containers are so durable that they are passed down from mother to daughter. I just wish they would wear out faster. Frozen foods do spoil, but Orthex containers don’t.
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It’s coming. I’ll make it public soon 
EDIT: Here it is 
Orthex yhtiöesittely maanantaina 15.3. klo 18.30 - Inderes
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Hey good human, when looking at the valuation, the P/E ratio based on last year’s actual earnings is around 10.
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Not quite, operating profit and net profit are different things.
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Oh darn, that was a blunder. How did I see “operating result 12.3M” in the opening post, when it clearly says “operating profit” there? My bad!
I’ve been thinking about this growth realism myself. The company’s main product is a low-margin consumer product, which was already commented on earlier in this thread as being comparable to cardboard.
The company should either acquire, for example, a European competitor with sufficiently high-quality production and existing distribution channels, OR figure out what magic trick makes it worthwhile to transport plastic across the Baltic Sea to stores. In the latter case, they would still need to figure out the distribution channels to handle sales. A plastic bucket isn’t a product that sells itself by brand; people buy what’s available in their local supermarket.
Furthermore, in the European household goods market, there are several regions where consumers are extremely price-conscious due to circumstances, and the threat of recession caused by the pandemic will certainly not reduce the penny-pinching of that consumer segment. It’s hard to imagine anything other than local manufacturing to keep unit costs, including transport, at a tolerable level for margins.
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Yeah, it really just raises the question of whether that level is sustainable. 2019 saw a lot of growth. Is it thanks to corona?
For containers and such, there would presumably be a particular need during these times, with people getting takeaway food and so on at a multiple rate.
2018 also had completely different numbers.
Margins can only go up so far?
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Noob question:
How do I participate in this listing through my own bank (Danske)? I haven’t participated in listings before and I’m completely clueless about how the process works.
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