Arttu says hello to the table, because here’s a new company report from Puuilo after Q3. 
Puuilo reported a well-anticipated result with revenue and profit growing at a good 10% rate. We still see the company’s long-term growth and value creation potential as strong, in addition to which the stock’s valuation has also moderated. We raise our recommendation to add (previously reduce) and reiterate our target price of 14.5 euros.
Quoted from the report:
Cash flow at a healthy level, and balance sheet in strong condition
For Q1-Q3, the company has accumulated 65 MEUR in cash flow, which is an increase compared to the reference period (44 MEUR) due to higher profit. Precise figures for calculating free cash flow are not provided in the Q3 report, but the investment pace for the current year has been moderate. With the expanded store network, rental payments have naturally increased, but free cash flow is likely still at a healthy level. Puuilo’s good balance sheet position is reflected by a net debt/EBITDA ratio (IFRS 16 adj.) of 0.5x, while the company’s self-imposed upper limit is 2.5x. This also secures financing for a faster growth pace (e.g., internationalization or acquisitions) if needed. So far, however, the company has been able to expand through self-financing, which reflects the business model’s strong cash flow profile and low investment needs.