Atte was interviewing CEO Jaakko Heikkilä regarding Q3. 
Topics:
00:00 Introduction
00:11 Strong development continued in Q3
00:57 Margin development
01:46 Project handovers
03:43 Future growth
04:57 Competitive situation
06:52 Demand situation in the commercial premises sector
07:47 Availability and price development
10:23 Self-developed projects
11:55 Revenue recognition in self-developed projects
13:14 Role of self-developed projects
It seems it won’t be able to get the stock price up, no matter what kind of results it achieves. If buyers aren’t interested, then they’re just not interested. I do wonder a bit, though. Well, I’ve wondered about many other things too. Let’s wait a bit longer, then I’ll liquidate it and others can try their luck with this. I thought this was a good investment, but ‘assumption is not the same as fact,’ as they say.
Tekova’s business is not about “getting the share price up” but building square sheet metal halls, to put it bluntly. In stock market trading, investors then trade at the price they assign to the operation. Operationally, the company is doing great, and although in the short term the stock market is a voting machine, in the long term it is ultimately a weighing machine.
Also, if one speaks of “investing,” the time horizon cannot be this short. The company has been listed for just under a year, and relative to its first close, it has yielded over 60%. Hasn’t that been a quite decent investment even in such a short timeframe? And when talking about investing, one should look at a slightly longer timeframe; when speaking of timeframes under a year, one could speak of trading or speculation.
In addition, the share price has risen 100% in three months. We are talking about a company where the CEO (!), according to their own words, does a lot of bid calculation, and practically all success is based on a handful of people who have been in the industry for a long time, who can fall out, get sick, get hit by a car, or do something else that quickly affects the company’s operations if things go less than ideally.
So I’m not saying this would happen, or is happening, but it has certainly happened in the industry.
Furthermore, there are no guarantees that next year’s operational figures will follow this year’s. Although, at the same time, it must be noted that, for example, Puuilo announced yesterday the opening of a new store in Northern Lahti, and this may again bring work to Tekova as well.
I didn’t actually want to doubt the CEO’s contribution to the company. Rather, I doubt that in a rapidly growing company, it is very sustainable for the CEO to be the person who does the bid calculation. And if this is a competitive advantage, then sooner or later it will end.
It is quite clear that the CEO, as a major owner, is fully committed to the company. I would only see a divestment of ownership in the event that Tekova is acquired. Unfortunately, this is very possible.
Tekova has indeed been a good company for those who invest short-term. I joined a bit late, not so good. If the idea is that growth is not necessarily in sight in the future.
Perhaps I would recommend creating your own forecast scenario for, say, three years, and then playing around a bit with the P/E ratio, or other possible multiples. One could also consider that if the company continues stable performance, the P/E ratio could rise somewhat higher in the future. In my own scenarios, I have estimated Tekova’s price at the end of 2028 to be 1.9 euros with a P/E ratio of 8. Presumably, during this period, there will also be steady dividend yield. So, at least when viewed through my own optimistic lenses, Tekova is still a target that increases in value, even though I, of course, bought my own stake at an average price slightly above 0.8 euros. Currently, I mainly hope for a small wrinkle in performance (because sooner or later, a project builder will experience one), so that a good window for adding to my position would open up.
What should one think about these, or should one think anything at all? This information is probably already priced in, so it’s quite interesting that something like this is being announced. Wouldn’t the more appropriate place to publish this be on Tekova’s own website in some “news” section?
Part of a larger entity, whose previously announced value is approximately 19.4 million euros. It’s good to announce details, as it was previously stated that this would be done: Tekova launches two self-developed projects - Inderes
Here are Ate’s comments on Tekova’s new agreement regarding its self-developed project.
Tekova announced that it had signed an agreement for the sale of a commercial property it developed with the real estate company Prisma Properties. This is a self-developed project in line with the company’s strategy, where a commercial property of over 5,000 square meters will be built in Raasepori. The project is a positive indication of the company’s ability to develop attractive commercial properties for investors.
Tekova announces:
Contracts are coming in at a good pace. This was probably scheduled with tomorrow’s Investor event in mind. Significant in size, and if the company has also made smaller agreements than this and the previously announced one, there is a reasonable amount of work and revenue expected for next year.
It’s cheap. EV/EBIT is around four. When I highlight key figures here, today I would introduce you to this year’s ROE%. It is 66%. Both key figures are forecasted by Inderes. The market clearly demands quite strong evidence from Tekovalta that this year is not just a fabulous stroke of luck.
Atte has written comments regarding this recent letter of intent.
Tekova announced on Tuesday that it had signed a letter of intent for a self-developed project worth approximately EUR 17 million. The project is significant in size for the company and supports the strong revenue and profitability levels maintained in our forecasts for the coming years.
*Of significant size, and if the company has also made smaller agreements than this and the previously announced one, there is a reasonable amount of work and revenue known for next year.
It’s worth paying attention to whether the company has also made other agreements. In my opinion, the company has so far announced all deals that have been made. It would be a clear change in their operating practices if they now only announced larger deals.
Has this disclosure policy been explained somewhere? Does @Atte_Jortikka know?
As I understand it, larger individual projects are announced, followed by a summary of all contracts won during the quarter, which is released after the quarter.
Tekova’s CEO Jaakko Heikkilä was talking about his company at the Sijoittaja 2025 event.
Tekova has had a lot to announce lately, just came:
The latest ownership list shows that the stock seems to be appealing to our western neighbor. SEB is continuously increasing its ownership in Tekova. Apparently, the Swedes have smelled money in the construction sector. Construction always recovers from a slump, and since Tekova is doing so brilliantly already, how well will it do when construction truly picks up.
Probably not so well in terms of margins anymore as contracts and building materials become more expensive. Construction companies like Tekova, operating with a small staff and low fixed costs, are often good at leveraging the negotiating power brought by a lack of work in contract negotiations with subcontractors.
Instead of Tekova, mammoths like YIT usually suffer significantly from a poor economic climate, as massive fixed costs and salaries must be paid regardless, even if revenue is barely generated.