Translation: Original published in Finnish on 09/22/2026 at 07:00 am EEST

We reiterate our Accumulate recommendation and EUR 10.5 target price for Aallon Group. The profitability improvement seen in H1'26 indicates that the company's implemented reorganization is starting to bear fruit, and further efficiency is sought through the Lean development program. Slow organic growth in recent years and uncertainty surrounding the AI disruption have pushed the stock's valuation to a very low level (2026e-2027e EV/EBIT 9x-7x) and expectations for future development are very modest. We find this makes the risk/reward ratio attractive, as we believe the company will continue its activity on the M&A front, and the nascent recovery of the Finnish economy may also begin to gradually support performance starting next year.

The AI revolution creates uncertainty over defensive growth

Aallon Group's overall investment profile is interesting, as the company combines the defensive and stable nature of the accounting business, which is complemented by a systematic acquisition strategy to accelerate growth. The strategy has also yielded results, with revenue growing by an average of 14.5% per year in 2018-2025. The majority of revenue is recurring, which reflects a highly predictable business due to long-standing customer relationships. The return on capital of the business is at a good level and the cash flow is abundant. In addition, the company's strong balance sheet provides support for the implementation of its growth strategy. However, the ongoing AI revolution introduces significant uncertainty into the longer-term outlook for the entire accounting industry. On the one hand, this streamlines routines and increases the role of value-added services, but on the other hand, it weighs on the pricing of traditional accounting. We believe Aallon Group is well-positioned to respond to the disruption, but the outcome is difficult to estimate and is already reflected in the sector's decreased acceptable valuation multiples.

The accounting services market is consolidating step by step

The accounting services sector in Finland is highly fragmented, as we estimate that the 10 largest players account for some 45% of the total market of 1.5 BEUR. However, in light of industry trends, the step-by-step consolidation will inevitably continue. Aallon Group's personnel-driven and customer-focused approach provides it with a strong foundation for continued market share growth (2025: some 2.7%).

Currently, growth rests on the shoulders of acquisitions

This year, growth (2026e +5%) rests on acquisitions, as customer churn related to the real estate management sector weighs on development in H2 as well. Recently, there have been signs of a turnaround for the better in the Finnish economy, which will nevertheless affect the accounting industry with a delay. On the profitability side (2026e adj. EBITDA margin of 16.6%), the implementation of the reorganization supports development, and further efficiency is being sought through the Lean development program. Successful implementation of the program is also a precondition for the efficient deployment of AI and automation solutions at the group level.

Valuation appears very low

Uncertainty caused by the AI disruption is heavily priced into the valuations of Aallon Group and many other publicly listed service companies this year. In our view, Aallon Group's valuation is now weighed down, in part, by the negative organic growth. With our estimates, the adjusted P/E ratio for 2026 is 9.7x and EV/EBIT is 8.7x. In our view, the multiples are very moderate, and expectations for future development have been pushed to very modest levels. For 2027, the valuation (P/E 8.7x) drops to a very low level, provided that the slight earnings growth we expect materializes. Part of this should materialize through already completed acquisitions. We believe that the company's acquisition strategy creates value and that its consistent execution will increase the company's fair value in the coming years.