Good evening to the thread!
We initiated coverage of Posti today with a target price of 10 euros and an add recommendation. What makes this story attractive is its robust dividend yield, which appears to be on solid ground for the next 3-4 years. This is supported by its property portfolio designated for sale (fair value 100 MEUR). Our forecasts include moderate earnings growth, which should drive the share price upwards over time. If earnings growth materializes and market confidence in Posti increases, there would also be room for an increase in valuation multiples at this stage. In our opinion, the key question mark in the investment case is the long-term sustainability of Posti Services’ current earnings level, largely due to digitalization. The company has a good track record of adapting the cost structure of Posti Services (see the segment’s earnings development over the past few years), but without leveraging digitalization (OmaPosti), Posti Services’ earnings could melt away at a rapid pace over the next 5-10 years.