Tulikivi - Fireplaces, ovens, saunas and natural stones

Stocks
26

Certainly, but I’m intentionally leaving that out. Because it has “use value,” meaning its value is realized in products that are sold. I don’t believe they would start quarrying soapstone for sale as such.

Edit: And of course, that talc mine will probably sell for a dirt-cheap price because it’s more or less a forced sale, and the buyer likely knows it. So Tulikivi (talc mine owner) isn’t a very strong negotiating partner unless, for some miraculous reason, there’s a bidding war for the mine. Therefore, I would be extremely cautious about the talc option as well.

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28

Long-term debt has decreased to 16 million, though. What exactly are trade and other payables?

29

This stock could see a pretty good rise in January. A nice turnaround has happened, and talc (talkki) as an option on top of that.

30

Looking at Antti’s captured balance sheet comparison from 2015 and 2019, I notice that in 2015, “interest-bearing debt” was neatly separated for the long term, but this line has disappeared from the 2019 version. Of course, the debts are still there, now just under “non-current liabilities” and “other non-current liabilities.”

However, together with short-term debt, this would amount to about 16.5 million euros in interest-bearing debt, so a direct 1 million euro EBIT would cover 6% of the debt interest almost exactly, although the debt itself wouldn’t decrease.

That 1 million euro, however, might include adjustments and other computational items that don’t pay off debts. And the entire cash flow cannot actually be used solely for interest-bearing debts; the “trade and other payables” of 9 million euros in short-term liabilities would also have to be managed. This is likely Tulikivi’s accounts payable, i.e., unpaid invoices for now.

I don’t know if Tulikivi can get cheaper loans now. Maybe. (Would you lend Tulikivi a few million at 6% interest yourself?) But you can’t justify a turnaround by appealing to the exceptional circumstances of the stay-at-home market, especially since the current performance is only enough to stay afloat for now. Such a turnaround would require years of favorable development.

This is not theoretically possible to make a turnaround until it shows it can cope with its debts.

Someone can probably make a quick trade with this, but then someone else will still put it in their long-term portfolio.

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31

I agree with @Helel; that one positive earnings report doesn’t mean a turnaround yet. This stock will only truly rally when the operating profit margin stays positive for 3-4 consecutive quarters, preferably without stay-at-home restrictions (i.e., a special market situation). Until then, I’d rather keep my money in Harvia.

This only becomes a multibagger when they figure out how to generate revenue growth as well – the talc mine is a wildcard, and I don’t make investment decisions based on those.

@Pyyleva Unfortunately, Harvia has about 50 more interesting acquisition targets. Primarily companies that are already profitable. And even if they did buy, the premium would be pretty much 0 precisely because of those debts and potential.

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32

I wouldn’t be surprised if Harvia buys this to get it out of the way.

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33

I’ve been thinking about this today and a moment ago I pressed the sell button. I originally bought it thinking that a profitable year would raise the share price somewhat. I didn’t really expect a positive earnings surprise, although I considered it possible.

Reasons for selling:
Debt. No development in the last 5 years. It has even increased slightly.
The future seems uncertain. I don’t dare to bet that this year’s good momentum will be permanent. Perhaps this year’s good result will help negotiate better loans and thus gradually turn the boat around, but there are too many uncertainties. Vauhkone’s talk in the video about debt reduction bothers me a lot. I just don’t have confidence.
The new products look neat compared to previous ones, but the margins are clearly too small.
The talc mine might someday hit the jackpot, but isn’t that already an old story? Things have certainly moved forward this year, but I don’t want to wait 3 years.
Thanks to @Helel and @AnttiM. Your posts helped me form my own opinion and learn a little more about investing.
Perhaps it was a mistake to sell, but this is how we go.

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34

I was just about to write this here. And even if they don’t buy the whole company, there could be common interests on the oven side. Of course, a large portion of the heaters Harvia sells worldwide probably run only on electricity.

35

Great timing by the thread starter, who started a discussion about Tulikivi 4 days ago and wondered if it might be a rising stock.

Well-sniffed, as the company immediately announced a positive earnings surprise. :grinning_face_with_smiling_eyes:

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36

{“content”:“Sometimes you get lucky. Now I’m a bit annoyed that I sold too early. Since then, it’s gone up 20% on several days.\nWhat am I missing again, or is a turnaround already priced in and growing operating profit in the future?”}

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40

It seems the CFO is doing some renovations - 1/3 of the shares are for sale now that the price is historically high (957,000 sold, ownership ~2.5 million on 30.11)

https://www.inderes.fi/fi/tiedotteet/tulikivi-oyj-johdon-liiketoimet-jouko-toivanen-712021-klo-930

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41

For many, it seems things went a bit sour because they didn’t remember to calculate the valuation. Nowadays, buying negative results is popular, but one should still have an idea of what kind of results would make the current valuation sustainable.

Since there historically hasn’t been growth, and the scalability of turnover to the bottom line is what it is, a P/E of 15 would be acceptable for a company with stable results and manageable debt. A high P/E might be 18. This is if we’re lenient with Tulikivi and treat it as a stable, non-growing earnings machine.

Currently, at a price of just under 28 cents, for example, that P/E of 18 could be achieved with an EPS of 0.015 euros, meaning a net profit of approximately 800k. This would still mean an EBIT of 1.5M, and Tulikivi doesn’t have that (1M in the profit warning). To justify the current valuation, a profit improvement beyond the current one would be needed, and it would have to be sustained after the exceptional circumstances end.

Or at least some profitable growth. However, one shouldn’t rely on this, as Tulikivi hasn’t achieved turnover growth even in this stay-at-home market. So, turnover is at the level of last year and previous years, meaning the profitability improvement was not based on growth.

Otherwise, years of fading hope and a slide back to where we started will follow. It’s better for the decline to be sharp and fast, so you don’t have to pay time value in addition to capital. Now, however, it’s possible to foster hope again.

It’s a shame, @Marko3, that you didn’t get a swing, as there was even +200% available, albeit at someone else’s expense.

However, I would ask, are you still annoyed? In principle, quite a lot of money was left on the table if you had sold at the peak.

Technically, I think the steep decline will end at the latest around 20 cents at the 50 EMA, and whoever bought before the bounce will at least remain in profit.

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42

Well, in a way. 18% profit vs. 200% profit?
I, however, calculated the valuation and thought about it from a long-term investment perspective, and I no longer saw a sufficient risk/reward ratio at 18.3 cents.
In the long run, I’ll probably win with this more cautious approach.
In my opinion, I didn’t make an investment mistake, and I still made an 18% profit, so on the other hand, I don’t regret it.
Maybe in the future, I’ll manage to wait a couple of extra days. There’s no way I would have had the patience to wait until 46 cents though, so the 200% would have remained unachieved in every scenario.

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43

After the breakout, it was likely that the rise would continue for a while, but it came back down just as quickly. The extent of the rise was a complete surprise, even though Christmas is an illiquid magical time. Speed and dangerous situations.

Despite the company, it was a really good lift and an interesting, I think even educational case. :slight_smile:

Here one can consider how one’s own nerves would have held up during the ride. Honestly, I would be annoyed if 200% turned into 20%.

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45

Who was the sender trying to drive up the course price? Rumors? The one who sent messages to HCP, Oksaharju, and Mähkkä, among others. Is that illegal or can one try that oneself?

46

I think and hope that a better forum for this kind of speculation is Kauppalehti’s Tulikivi discussion.

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47

The investigations related to the talc mine are starting again. Somehow, it feels like the discussion around Tulikivi is going in circles, and these share price-boosting topics come out quite regularly. I think I first read about the exploitation of the talc mine (and its impact on the share price) about 5 years ago on the Kauppalehti forum. Based on this, one can then consider whether the company is 10% more valuable after this news:

https://www.inderes.fi/fi/tiedotteet/tulikivi-oyjn-tytaryhtio-nordic-talc-kaynnistaa-suomussalmen-talkkihankkeen-yva

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48

How do you see Tulikivi’s valuation this year? New fireplace directives will come into force on January 1, 2022, so will Tulikivi be the only manufacturer left in Finland?

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49

No matter what happens to other manufacturers, the most important thing is that Tulikivi’s result turns positive. Promises have now been made to that effect. It remains to be seen how those promises will be fulfilled.
I will forgive the CFO’s share sales as a temporary folly if the results develop in the right direction.
The company does not have a very good reputation for making profits, even though losses and debt burden have been steadily reduced. If successful, it could, of course, be some kind of turnaround company. There is still a long way to go and the risks are high.

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51

I didn’t know that, what great news! I would think that the demand for Harvia heaters would also be reflected in the competitor’s orders, I was just thinking today. Tulikivi has great heaters, by the way.

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