I really need to start a thread about Titanium, and I’m eager to hear what others think about the company. I’ve naturally held it since the IPO and have also topped up my position a bit along the way.
In my opinion, the stock has been lagging and undervalued since the listing.
It feels like the market believes the care home fund will only have an excellent year this year, and that profitability and earnings will take a hit in the future as interest rates rise. It also feels like the stock is considered a high-risk “time bomb” that could just explode at any moment, or at the latest when interest rates go up.
But think about it—interest rates aren’t going to rise significantly for a long time yet; investors can calmly look at other investment opportunities for quite a while. Since the best of the party is already over for stocks, a care home fund like this will surely remain a very attractive target for certain people for a long time. After all, this fund provides pure cash as yield, which is rental income from new care properties with long lease terms. Why would rising interest rates destroy the foundation of something like this? I believe the care home fund has many excellent years ahead, as the market situation remains favorable, and now Investium’s sales channels are also growing the fund size further.
I don’t believe the share price will double in the near future, but I believe the company offers a good and growing dividend to shareholders; additionally, the company provides a free option through M&A and new products. But why have those new products been constantly awaited when the care home fund is performing as well as can be expected?
The company’s risk profile has steadily decreased with the acquisition of Investium, the rise in recurring fees, and the overall growth in company size and the number of key personnel. The company’s balance sheet is also excellent.
I’m not writing this just to make the price go up that’s unlikely to happen. Definitely time for others to bring their views to the table: Is it possible that the stock is undervalued when it trades at a P/E below 9, with a dividend yield of 8.5%, a favorable market situation, strong growth prospects, a strong balance sheet, and being net debt-free? What else do you think of the company? Does anyone even have experience with the company and its products? What did you think of Investium?
Hey, the market isn’t skeptical about the future. It’s as excited as you are. Let’s look at the numbers. Titanium had an equity per share of €1.67 at the turn of the year, of which it distributed a third as dividends (€0.55 per share). Unfortunately, last year’s profits were lower than this, i.e., €0.29 per share. What’s interesting about Titanium is that most of its balance sheet is pure liquid assets. I don’t know where you got that P/E of 9. Share price €7.15 / €0.29 earnings = 24.7
Investium companies’ 2017 profit was €0.2 million. Divided by Titanium’s share count, this amounts to €0.02 earnings per share, if potential synergies do not improve the result. In the deal, Titanium arranged a directed share issue to Investium (good move!) and the current and future good that was previously divided by nine will now be divided by ten. There was also a cash payment of €1.2 million in the deal, so the investment should pay for itself in six years if the cycle remains good.
You made nice profits when you bought from the issue. What do you plan to do?
But then again, I don’t know what will happen to the stock in the future. I doubt anyone else does either. Maybe it will do well, extremely well, or some dramatic risks will materialize, and the company’s story will take new turns. All my previous views were just… well, views. But when considering different scenarios and thinking about the matter, I am relatively optimistic about the company’s story. Of course, the company has just been listed, and time will tell how it will fare during potentially weaker times in the future when market conditions change. Did I exaggerate a bit by saying the market fears the company is a “time bomb”? But the market’s view of the company seems cautious! =)
I’ve also been in since the offering and was impressed by the dividends, which are as large as the dividends from all my other holdings combined. But as with any investment, it’s under continuous evaluation.
Participated in the offering. The Investium acquisition was an unpleasant surprise. I kept wondering if it was a forced deal “at any cost,” meaning whether some other party would have bought this distributor from Titanium if they hadn’t reacted. I don’t like forced deals or seemingly expensive acquisitions where clear synergies/benefits aren’t visible. On the other hand, it was reassuring that the majority of the purchase price is paid with their own shares, which they cannot sell before 2022. This puts the Investium guys in the same boat as Titanium, and the desire to sell Titanium’s products like hell is probably strong, and successes will be felt in their own pockets, as will failures. That’s why it stayed in the portfolio.
“The owners of the seller, Investium Group Oy (“Seller”), Pasi Kosonen, Tarkko Laitinen, and Tom Lojander, have committed to working for the Titanium Group formed after the completion of the transaction under similar terms as Titanium’s founding shareholders Petri Kärkkäinen, Tommi Santanen, and Henri Prittinen. The Seller has committed to similar restrictions on the transfer of Titanium shares, extending until 2022, as Titanium’s founding shareholders.” Titanium Oyj: TITANIUM OYJ OSTAA INVESTIUMIN - Titanium OyjTitanium Oyj
Municipalities no longer build or manage any care, school, or daycare properties themselves, and this provides a great opportunity for various care funds to operate profitably. Molds and the like have increased this construction tremendously. It can be seen daily, for example, in Masse’s hometown. Masse thanks them, the taxpayer does not.
Titanium, Hoivatilat (with Lehto as the builder), and others have seized/are seizing this opportunity properly, and it’s worth joining them for the ride.
Haha, I’ll leave the word “analysis” entirely to the analysts
As I understand it, municipalities are still building plenty of walls. Instead, there might even be a slight oversupply in the care market at the moment. This probably weighs most heavily on Lehto, and less on clients like Hoivatilat/Titanium.
Masse is probably right about municipalities building at least care homes. Probably few municipalities currently dare to build care homes themselves for their own ownership, because with the social and health care reform, the buildings may fall into the hands of the regions. On the other hand, many municipalities are also indebted and may not have the financial capacity or even the sense to own the walls themselves. Several studies have also shown that private operators are able to produce, for example, daycare services more cost-effectively than municipalities, so this can be attractive for municipalities. The share of private operators has grown strongly in recent years, especially in daycare, and this is likely to continue. One driver is precisely the mold problem. For example, according to a 2016 study by the Association of Finnish Local and Regional Authorities, 12-18% of Finnish schools and daycare centers suffer from significant moisture and mold damage. Based on this, among other things, we have estimated that the private daycare market will grow by more than 10% annually in the coming years due to these issues. There may already be a temporary oversupply in some areas in assisted living, but this mostly affects builders, not so much Titanium and Suomen Hoivatilat.
Just quickly glancing at the earnings report, it seems that revenue and adjusted profit after depreciation went almost exactly as Sauli predicted. So, it was probably an expected but strong, very strong result and performance from the company. The margins and growth percentages are in a league of their own. Hopefully, the margins will remain high in the future. The stock price seemed to gain some momentum already last week.
I’ll have to read the earnings report and Tomppa’s comments thoroughly tonight. I wonder if they threw out any targets, hmm..
It is important to note that Titanium’s revenue includes an exceptionally high amount of one-time income from the Hoiva Fund. Titanium’s Hoiva Fund fees consist of three elements: 1) management fees (recurring, most valuable from an investor’s perspective) 2) performance-based fees (as the fund’s return declines with market returns, the role of these will inevitably continuously decrease) 3) transaction fees (Titanium receives a 2% fee on all real estate transactions made by the fund, which is entirely tied to the fund’s growth). In H1’18, Hoiva’s revenue was, in my estimation, about 6.6m, of which management fees were about 2.5m, performance-based fees about 1m, and transaction fees about 3m. As a result, Titanium’s figures look a little too good compared to their sustainable level. This is also why the company is priced at rather modest multiples. The larger the Hoiva Fund grows, the more the emphasis shifts to management fees => the more valuable the fund becomes in the eyes of investors. In the coming months, it is worth following the net subscriptions of the Hoiva Fund in Titanium above all, as this will guide the share price development.
The towel wasn’t thrown in with all asset managers. We are still increasing our position in Titanium, but lowered the target price because the acceptable valuation has come down with the peer group, and market risks have clearly risen. We still have a buy recommendation for CapMan because short-term market fluctuations have only a limited impact on CapMan.
Taaleri and Evli were changed from buy => reduce, because both of their results are taking a hit from this market nervousness, and there is no room for appreciation in valuation levels without earnings growth. I recommend checking our reports and justifications behind these changes.
Here, the important question, in my opinion, is whether the salespeople “left” or were “let go”? I wouldn’t be surprised if Titanium were to cut down on the number of salespeople. Typically, in these sales-driven companies, the top 10% of salespeople account for about half of all sales, and the bottom 50% barely cover their own costs. I wouldn’t be surprised if this were also the case at Investium.
I know what you mean, but I couldn’t be bothered to write things that boringly, so I took a slightly more sensational tone, which is always much more fun.
I already came to the same conclusions yesterday and sold the rest of my Evli shares. Last week, I sold dollars closer to ten, at a price of 9.5 euros, if I remember correctly. You’re definitely on the right track when you follow my lead.
Now I don’t have as much wealth management as I did a month ago.
Yeah, it’s possible that they’re also cutting down on the most unnecessary salespeople there. It would be nice to get some information, as this isn’t going to drop to 6.5 euros by any means, which would be a safe price to buy at according to my own calculations.
P.S. Of course, you can’t take these white swans into account in your estimates.
That target price has been lowered mainly in line with the share price drop. If all financial companies go down, so will Titanium’s share price, and the target price has to come down with it a bit. That’s why the target price should only be taken as a guideline. The company’s fundamentals, however, remain largely unchanged.
It must have been known all along that the weakening market situation also affects Titanium’s price. When the market will turn downwards is always hard to say.
Titanium’s earnings will admittedly take a very limited hit compared to other benchmarks if the market declines. That’s why I like Titanium and especially this care property.
That deal is interesting though. Apparently, they got a pretty good price for those properties. What could be the real purpose of the deal? Apparently, the 48ME will go towards fund development, and the profit will further strengthen the company’s cash reserves… how much was the actual capital gain from it in the end?
Why don’t all sales-driven companies then get rid of their worst-performing salespeople? If they are seen as a burden to the company, do other companies then consciously want to keep unproductive individuals? Aren’t these salespeople commissioned, and good salespeople probably have good negotiation opportunities regarding their compensation? If a lot of sales are desired, then as a result of staff turnover, unproductive individuals will always join the company, and especially in a larger firm, it’s not possible to simply switch to keeping the best and kicking the others out.
That deal is interesting. It seems they got a good price for the properties. What could be the real purpose of this deal? Apparently, 48ME will go towards the fund’s development, and the profit will further strengthen the company’s cash reserves… how much was the actual capital gain?
These things will probably become clear in the next monthly report, but at least they don’t seem to have gone at a loss.
Those big firms probably don’t care much about what they get, as long as they get something, so I’d say these kinds of deals are quite okay. They get to dump everything not so nice to other parties. From Titanium’s side, since the deals have been negotiated by people who own both Titanium and Hoiva, it’s hard to imagine that the comrades made disadvantageous deals for themselves.
A bit of a bandage for the wounds of the Investium deal.
that’s unlikely to happen. Definitely time for others to bring their views to the table: Is it possible that the stock is undervalued when it trades at a P/E below 9, with a dividend yield of 8.5%, a favorable market situation, strong growth prospects, a strong balance sheet, and being net debt-free? What else do you think of the company? Does anyone even have experience with the company and its products? What did you think of Investium?
