Translation: Original published in Finnish on 7/15/2026 at 8:18 pm EEST.

A strong start to the year turned into weaker demand in Q2 due to geopolitical uncertainty. In our view, the company's guidance is uncertain, but we still consider the stock's valuation attractive, even if earnings remain near the lower end of the guidance range, as we currently forecast. The company has largely succeeded in significantly improving its profitability and strengthening its balance sheet. We reiterate our Accumulate recommendation but lower the target price to EUR 1.4 due to estimate cuts and guidance risk (from EUR 1.7).

Figures missed expectations, but the balance sheet has developed in a healthier direction

Q2 was weaker than expected as the decline in revenue was reflected in the earnings lines. Revenue decreased by 13% year-on-year, influenced by customer caution amid geopolitical uncertainty. EBITDA decreased to 0.44 MEUR (Q2’25: 0.99 MEUR, we estimated 1.07 MEUR). In addition, the reported figures were negatively impacted by the company reducing the capitalization of R&D expenses on the balance sheet, although this does not have a corresponding impact on cash flow. However, H1 as a whole was on par with the comparison period in terms of revenue and stronger in terms of EBITDA, thanks to a good Q1.

The company has been able to reduce its debt relatively significantly in the early part of the year, which was also reflected in lower net financing expenses. Net debt at the end of June was only 7.9 MEUR, or 2.8x EBITDA (3.4x at the end of 2025). The company paid a dividend of EUR 0.02 per share to shareholders in May, totaling 0.22 MEUR.

Weak demand increases guidance risk

We lowered our 2026 revenue estimate by 3% and our EBITDA estimate by 15% due to a weaker-than-expected Q2 earnings report. The company reiterated its guidance, according to which 2026 revenue is expected to be 30-32 MEUR (2025: 28.7 MEUR) and reported EBITDA 3-4 MEUR (2025: 2.65 MEUR). The guidance implies H2 revenue growth of 9-24%, which cannot be taken for granted due to strong comparison figures and weak Q2 order intake. We interpreted that the outlook for Q3 is clear, but there is some uncertainty regarding Q4 demand. The forest and construction sectors remain challenging, whereas the defense, mining, and marine industries, among others, are performing well. The company has invested in new customer acquisition in recent years and expects this to be more clearly reflected in revenue starting from the end of the year. Regarding NorrDigi, the company commented on growing interest in electromechanical actuators (EMA), but no concrete significant orders are yet known.

Valuation is cheap even at the lower end of the guidance range

Although our revenue forecasts are slightly below guidance and our EBITDA forecasts are near the lower end of guidance, the stock's earnings-based valuation appears quite reasonable (EV/EBIT 2026e: 10x). When considering the negative impact of NorrDigi, which is in an early stage of development, on earnings (0.5-1.0 MEUR/year), the valuation of the conventional cylinder business can be considered quite favorable. In our view, the gradual reduction of the debt burden has decreased balance sheet risk, although intangible assets are subject to impairment risk if NorrDigi's growth does not progress in the coming years. We estimate that the conventional cylinder business still has medium-term earnings growth potential as the utilization rates of the modern factory increase, which, combined with the favorable valuation, keeps the risk/reward ratio attractive.