Spinnova H1'25: Gauging the risk/reward profile still very difficult

Translation: Original published in Finnish on 8/29/2025 at 8:26 am EEST.

We reiterate our Reduce recommendation for Spinnova and our EUR 0.45 target price. We have not made any material changes to our forecasts for the commercialization progress of Spinnova's technology following the company's H1 report. Due to the exceptionally difficult-to-assess risk/reward ratio, we are maintaining a cautious stance on Spinnova for the time being. 

H1 report contained no significant surprises

Spinnova's H1 report did not contain any new, significant information regarding the company's strategy, which was published in the summer, or its priorities. On Wednesday, the company also finalized agreements to terminate its cooperation with Suzano, in accordance with the previous letter of intent. We consider this a favorable outcome, given the initial situation's difficulties. With the termination of the partnership with Suzano, Spinnova will be able to seek partners with greater freedom in the wood pulp sector and also target various niche segments. While this may facilitate commercialization, the company must still find ways to significantly reduce the production and investment costs of the technology. The key elements of this work are 1) reducing the energy consumption of MFC production, 2) decreasing the use of expensive polymers, 3) improving drying efficiency, and 4) simplifying post-processing. While the company appeared to have clear direction and signposts for moving forward with development efforts, the timelines remain quite unclear. The same applies to partner negotiations, where Spinnova appeared to be seeking a more concrete financial commitment from its potential partners regarding the development path than before. We estimate that development work and partner negotiations will take another 1–2 years, but there is still a large margin of error in this estimate.

Suzano arrangements incorporated into our estimates

In connection with the report, we included the agreed-upon arrangements with Suzano in our estimates, whereby Woodspin and Suzano Finland (MFC processing) will be transferred to Spinnova's ownership at a nominal purchase price. Under the agreements, Suzano will invest 5 MEUR in the companies while the long-term lease agreement for the Woodspin plant property will transfer to the Spinnova Group. Although this will significantly increase Spinnova's reported net debt under IFRS accounting, we estimate that the arrangement will remain cash positive for Spinnova for some time due to Suzano's 5 MEUR investment and the discontinuation of Woodspin and Suzano Finland's operations. Due to the change in balance sheet structure, we also slightly lowered Spinnova's cost of capital. Additionally, we lowered our earnings and revenue forecasts slightly for 2026 while adding some product revenue from material sales at the Woodspin plant to our long-term estimates.

We expect Spinnova's revenue to remain negligible for at least this year and next. According to our preliminary estimate, Spinnova could begin its first technology deliveries starting in 2027, but low revenue will keep Spinnova's EBIT in the red until the early 2030s. In our projections, business operations will not begin to scale until the mid-2030s when more technology projects will be in delivery simultaneously and will be larger than those in the initial phase. However, the company’s predictability remains exceptionally poor. The main risks to our forecasts are failure to reduce technology investment and operating costs, failure to find technology customers, halting of the sustainability trend, and terms of further financing that commercialization is likely to require.

Situation still too uncertain

It is exceptionally difficult to assess the risk/reward ratio of Spinnova's shares, and a positive risk/reward ratio is not apparent in our base scenario (cf. the DCF value is at our target price level, and the EV/S for the coming years is high). Therefore, we maintain a cautious view of the stock.