Here is the company report from Frans following the Q4 results.
Ovaro’s Q4 result was overall in line with our expectations. The uncertainty regarding the Hervanta project materialized, at least for now, but otherwise the project comments were positive. In particular, the significant Teollisuuskatu project in Kuopio looks promising and could start as early as Q2. The company’s guidance points toward earnings growth and was slightly stronger than our expectations. We slightly raised our earnings forecasts. However, predictability is weak in the short term, and earnings development depends heavily on the initiation of projects. With a low valuation (P/B 0.62x) and the potential of the project pipeline, we still see the risk/reward ratio as positive. The expected return is supported by a 4% dividend yield and the option for continuous balance sheet optimization. We reiterate our target price of EUR 3.70 and our Accumulate recommendation.
Here are Frans’s comments as Ovaro has acquired a plot in the center of Levi for an approximately 8 million euro real estate development project, which will involve a 12-unit holiday apartment accommodation project.
We are downgrading Ovaro’s recommendation to Reduce (previously Add) and lowering our target price to EUR 3.30 (previously EUR 3.70). The escalation of the Middle East crisis has raised inflation expectations, which has sharply increased interest rates. The rise in interest rates strikes at the core of Ovaro’s strategy, which relies on recycling the balance sheet and initiating new projects. This is particularly emphasized in a very subdued new housing market, which has increased forecast risks for the coming years. A low balance sheet-based valuation (2025 P/B 0.58x) provides security for the stock in the current uncertainty, but we believe that with our changed forecasts, the stock’s expected return will fall below our cost of equity (12%) in the short term.
Here are Frans’s comments as Ovaro reports its Q1 results on Thursday, May 21st.
We expect the company’s operational result to have declined and the reported result to remain modest during the seasonally weak Q1 quarter. We do not expect any project progress income or significant capital gains or value changes to have been recognized for the quarter, meaning Q1 does not yet reflect Ovaro’s new strategy. At the core of Ovaro’s strategy is the transformation into a full-fledged real estate developer, and the company has continued to advance its project pipeline in the early part of the year through, among other things, the launch of the Kerava residential project, the Levi plot sale, and, after the review period, the Joensuu conversion project. On the earnings day, we are once again particularly interested in the progress of the Jyväskylä Kukkula project and other development projects in the current market environment challenged by rising interest rates, as well as the conditions for balance sheet recycling.
Here is the company report on Ovaro by Frans following the Q1 results
Ovaro’s Q1’26 results were seasonally weak and slightly missed our forecasts on the bottom line. The company reiterated its guidance for 2026, and the earnings development for the remainder of the year relies, as usual, on the progress of development projects. In our view, the realization of the project pipeline has taken clear steps forward, but rising interest rates and potential inflationary pressures have increased short-term risks. The balance sheet-based valuation is low in absolute terms (2026e P/B 0.56x), but we expect the total return to remain around our cost of capital requirement due to the aforementioned risks. We reiterate our Reduce rating and target price of EUR 3.30.
Here are Frans’s comments regarding Ovaro’s new nursing home project.
Ovaro will implement a 53-bed assisted living facility for Nonna Group in the initial block of Jyväskylä’s Kukkula district, with an investment value of EUR 8.5 million. The zoning plan for the Kukkula initial block is estimated to become legally binding in the fall of 2026.
Here are Frans’s comments on how Ovaro is launching and selling the Kuopio commercial center project to an international investor for a price of 15.3 million euros.
Here are Frans’s preliminary comments regarding Ovaro’s results, which will be published tomorrow, Thursday
We expect the company’s revenue to have declined slightly due to property sales, and for the result to remain negative. For the quarter, the result largely consists of rental income and does not yet reflect the company’s “Buy-Develop-Sell” strategy, whereas in the comparison period, the result was supported by a large capital gain and fair value changes. The core of Ovaro’s strategy is its transformation into a full-fledged real estate developer, and we believe the company has taken steps forward over the summer, including the launch and sale of the Kuopio project and a new nursing home project. In the report, we will, as usual, pay particular attention to the progress of development projects (such as Kukkula in Jyväskylä).
And then Franco’s comments on how Ovaro intends to move from the main list to First North
Ovaro announced on Tuesday morning that the board of directors proposes the company’s transfer from the Nasdaq Helsinki main list to the First North Growth Market Finland marketplace. At the same time, the company intends to change its reporting standard from IFRS to Finnish Accounting Standards (FAS), as a result of which the company withdrew its previous earnings guidance for the current year, which was based on IFRS figures. We consider the change positive for the company, as the estimated annual cost savings of EUR 300k brought about by moving away from IFRS reporting are quite significant for a company of Ovaro’s size. We believe the news is positive, but we will closely monitor how well the company manages to maintain the transparency of its reporting after the transition. In the company’s current strategy, the result will in the future consist mainly of project margins and sales proceeds, and we therefore think it is good that the result will be based on realized transactions rather than calculated fair value changes.
Here are Frans’s quick comments on Ovaro’s morning results
Ovaro’s second-quarter revenue slightly exceeded our expectations, but the operating result fell further into the red than we anticipated. The deviation was mainly due to one-off costs related to real estate development projects that could not yet be capitalized on the balance sheet, while at the same time, no corresponding income had yet been recognized from the projects. The company recently withdrew its guidance as it plans a move to the First North list and a transition to FAS reporting. In terms of the investment story and value creation, the key projects appeared to be progressing in line with our expectations. There is some downward pressure on our short-term forecasts, but we believe the outlook for the coming years remains unchanged or has slightly improved due to the good development of the project pipeline.
Frans interviewed Ovaro’s CEO Marko Huttunen regarding Q2
Topics:
00:00 Introduction
00:13 Q2 in a nutshell
02:09 Front-loaded costs
02:44 Kuopio development project
03:45 Jyväskylä Kukkula project pipeline
06:13 Multiple projects starting up
08:14 Apartment building under construction in Kerava
09:11 Transfer from the main list to the First North marketplace
12:06 Guidance
12:38 Market situation
Here is the company report for Ovaro after Q2 from Frans
Ovaro’s Q2’26 result remained weak, but projects progressed slightly better than we expected. The company previously canceled its guidance for technical reasons as part of the First North listing proposal and the transition to FAS reporting. The transition to FAS will eliminate the calculated changes in fair value and will likely lower balance sheet values as they will be based on acquisition costs, but this has no impact on fair value. The weak new-build housing market, rising interest rates, and potential inflationary pressures keep the risk elevated, but with the share price having declined and the positive progress of projects, we believe the risk-reward ratio is attractive again (2026e P/B 0.52x). We reiterate our target price of EUR 3.30 and upgrade our recommendation to Accumulate (previously Reduce).
Someone has to cast the first stone. Even if it means a shameful retreat down the list. Ovaro is doing this by trying to move from the main list to First North.
The operation still requires an extraordinary general meeting and the blessing of Nasdaq Helsinki. I am just a professional poker player, not a fortuneteller, so I will not attempt to predict the outcome. But I will try to explain where the need stems from.
This was a really great write-up by Aki. In my opinion, First North and the transition to FAS are very sensible moves for Ovaro. Pyysing wrote very well that with a P/E multiple of 15x, 300 thousand would correspond to 4.5 MEUR of added market cap. This is quite a lot given Ovaro’s 24 MEUR market cap.
Taxes have indeed been left out of the calculation; if there are 300k€ in savings, the net income after taxes—from which EPS and P/E are calculated—will not improve by 300k€.
[quote="Critter1, post:293, topic:303"]\ni tulos verojen jälkeen josta eps ja pe lasketaan parane 300k€.\n\n[/quote]\n\nThis is a good point, even though Ovaro has so much loss carryforwards that it won’t need to pay taxes for a while yet.
