Translation: Original published in Finnish on 10/31/2025 at 7:45 am EET.

Componenta's Q3 report exceeded our expectations thanks to stronger profitability than we had anticipated. The development of the order book was in line with our expectations, and we anticipate rapid earnings growth in the coming years as production volumes begin to increase. Although there were few changes to our estimates, the excellent profitability achieved strengthened our confidence in realizing our projected earnings growth. Due to clear growth drivers, we are more confident leaning toward the expected return indicated for 2027 in our view. Reflecting our slightly lower required return, we raise our target price to EUR 4.7 (was EUR 4.3) and raise our recommendation to Accumulate (was Reduce).

Profitability level was excellent for Q3

Componenta’s Q3 revenue grew by 22% to 24.8 MEUR, which was below our estimated revenue growth of 30%. Production volumes thus appear to have fallen short of our expectations, likely due to more extensive maintenance measures than in the comparison period, as mentioned by the company. EBITDA reached 1.9 MEUR in Q3, exceeding our 1.4 MEUR estimate. Considering the missed revenue forecast, Componenta achieved an EBITDA margin that was significantly better than we expected (Q3: act. 7.9% vs. estimated 5.2%). No single factor could be identified as the reason for the strong profitability, but rather it was the sum of several positive elements. In terms of cash flow, Q3 was subdued due to an increase in inventory levels, which we interpret as being partly in preparation for an increase in production volumes. The order book, on the other hand, settled at the level we expected at 18 MEUR.

Weak production volumes will not ruin the 2025 financial year

Componenta will achieve its guidance for revenue growth and stronger EBITDA as the company's earnings development during the first three quarters of the year has clearly outperformed the comparison periods. We forecast revenue growth of just over 16% in 2025, most of which (around 10%) is due to business transactions made at the end of 2024. Considering the slight price increases at the beginning of 2025, production growth will ultimately remain at a fairly low level (~+5%). In light of this, our projected EBITDA margin of just over 8% is an impressive achievement compared to the company's performance in recent years. n addition to the company's operational successes, we believe the strengthening profitability is due to the favorable revenue distribution development (e.g., increased share of revenue from the defense industry). We expect several customer segments to allow for an increase in production volumes in the coming years. According to our estimates, the agricultural machinery segment has the greatest room for improvement, and its growth would support foundry utilization rates, production efficiency, and relative profitability. Our earnings forecasts for the current year increased mainly in reflection of the forecast beat, while our estimates for the coming years remain virtually unchanged. However, Q3's profitability level was clearly stronger than we expected, which increased our confidence in the ability to achieve better margins as production volumes grow.

Good performance encourages reliance on earnings growth

After adjusting for the amount of factoring financing, which corresponds to interest-bearing debt, the EV/EBITDA multiples are 6x and 5x for 2025 and 2026, respectively, and the corresponding EV/EBIT multiples are 15x and 10x. P/E multiples that account for high financial expenses are at 20x and 11x. The DCF model yields a value of EUR 4.7. There is clear upside in the multiples in 2027. Due to clear growth drivers and increased confidence in earnings growth projections, we feel confident relying in our view to the estimates for 2027, where the expected return from dividends and share price growth exceeds our required return.