Translation: Original published in Finnish on 06/10/2026 at 09:02 pm EEST

Suominen has a rights issue underway. We updated the impact of the issue on our estimates, but operationally, our assumptions remained unchanged. The share issue will finance Suominen's turnaround program, which we believe will help the company return to profitability in the coming years after the losses of recent years. However, even considering this, the valuation is expensive. We reiterate our Reduce recommendation and revise our target price to EUR 0.6 (was EUR 0.62 share issue-adjusted).

Rights issue proceeds

This week, Suominen announced the terms of its previously disclosed 28 MEUR rights issue. The subscription right was detached from the share on June 9, so the share can now be valued as if the issue has already been completed. The actual subscription period, as well as trading in subscription rights, will begin on June 15. The outcome of the share issue will be known at the turn of June-July. As the offering has an underwriting from the main owners, its completion is already certain.

We have included the ongoing share issue in our estimates

We have updated our estimates now that the details of the share issue have been confirmed. We have removed our previous assumption of a 25 MEUR hybrid loan from our estimates and included net proceeds of around 25 MEUR from the rights issue. Thus, our estimates for the equity to debt ratio remain unchanged. As a result, the EPS estimates for 2026-28 have increased, as they no longer include interest on the hybrid loan. In our estimates, we account for a significant increase in the number of shares from 58 million to around 135 million shares. A larger number of shares decreases the estimated loss per share in 2026–2027. In later years, a higher number of shares will decrease EPS. We also included 2 MEUR in one-off costs from the share issue for 2026 and slightly revised our financing cost estimates for 2027-28. We did not make any changes to our operational estimates in this report

The company has guided for improved earnings for 2026

Suominen's Q1 earnings were below the comparison period, but the company guides for an improved full-year adjusted EBITDA. The Q2 outlook is mixed. On the other hand, Suominen believes it can regain half of the volumes lost in the US due to production disruptions as early as Q2. In addition, it stated that the order book is increasing overall, which may be due to customers increasing their inventories ahead of price increases and potential availability issues. Thus, volume development in Q2 should be good, especially compared to the last two quarters. On the other hand, the increase in the price of oil-based raw materials and energy will start to be reflected in the company's costs during Q2. The company announced it has switched to monthly pricing as costs rise sharply, which helps pass on increased costs to customers. Due to the sharp increase in costs, we believe it will cause a headwind to Suominen's earnings in the second and third quarters. Our adjusted EBITDA forecast for this year is practically at the comparison period's level (13 MEUR), and thus, in our opinion, there is a clear downside risk to the guidance. However, we expect the adjusted EBITDA development to be on an upward trend towards the end of the year.

Share prices in a clear earnings improvement, the expected return is weak

The share price is so high relative to earnings that it requires several years of strong earnings growth before the valuation is at a justified level (EV/EBIT somewhat neutral at 10x only in the 2030s). On our estimates, the company's EPS will not turn positive until 2028. Due to limited competitive advantages, we do not believe that the company can achieve a return on capital that sustainably exceeds the required return in the long term. Our DCF model's value is EUR 0.6, taking into account the rights issue; the model assumes a significantly better long-term margin for the company than currently.