Translation: Original published in Finnish on 10/01/2026 at 08:09 pm EEST

Apetit is a leading Finnish food sector operator that produces frozen vegetables and processes oilseed products. The acquisition of the unprofitable pea business in Sweden has weakened earnings and increased the risk level, while also offering more growth potential than before. We believe the current share valuation is based on the assumption that both the Swedish pea business and Oilseed Products achieve a substantial earnings turnaround. The turnaround depends partly on, e.g.,  the success of harvests and market development, which limits visibility and increases estimate risks. We are looking for more evidence of progress in the earnings turnaround, but for now, the valuation is very challenging, so we reiterate our Sell recommendation and EUR 11 target price.

Significant position in domestic food production

Apetit is a food company operating in Finland and Sweden with a strong integration into local primary production. The company has two different businesses: Oilseed Products and Food Solutions, plus a 20% holding in Sucros, a sugar refiner. Oilseed Products presses rapeseed into vegetable oil and cakes for feed use at its Kirkkonummi plant. Food Solutions has a versatile vegetable processing and frozen food plant in Säkylä, as well as a pea-focused plant in Skåne, Sweden. In both of its segments, the company is the only major domestic player in the market.

The strategy has focused on growth over the past year

At the end of 2025, Apetit published a new, more growth-oriented strategy that focuses on, e.g., legumes, plant proteins, the volume of oilseed products, and regionally on Sweden. The company acquired a pea processor in Sweden at an attractive valuation relative to its balance sheet value, featuring a modern factory but weak profitability. The turnaround of the acquired unit is partly in Apetit's own hands (trimming costs, investments in higher-margin channels), but increasing the plant's volume and utilization rate also depends on, e.g., farmers and the success of harvests, creating uncertainty in the earnings outlook (EBIT impact currently estimated at -3 MEUR/year).

Visibility into the earnings turnaround is unclear

The highest adjusted EBIT of recent years was seen in 2024 (9.3 MEUR), but this year adjusted EBIT is decreasing to only 0.8 MEUR due to losses in Sweden and a weak refining margin in Oilseed Products. In Oilseed Products, profitability fluctuates alongside factors like the price ratio between raw material and feed, and the company cannot fully influence earnings development The development of the nutrient-rich BlackGrain ingredient from rapeseed cakes is also currently an unprofitable element in Oilseed Products, although it could develop into an earnings growth driver in the long run. We expect earnings to recover significantly in both Sweden and Oilseed Products, leading to an EBIT improvement of 5-7 MEUR in 2027-28 (company target >10 MEUR).

Even a moderate turnaround is not enough to warrant the valuation

Apetit is a defensive and capital-intensive company in terms of its investment profile, and its profitability fluctuates occasionally with harvest seasons and changes in the cost environment. The company is capable of growing its earnings in the long term, but due to its capital-intensive nature, we estimate that value creation will be low. The EV/EBIT-based valuation has become expensive in recent years due to both earnings challenges and the relative weakening of the balance sheet. As the forecasted earnings turnaround materializes, EV/EBIT will decrease to 18x and 12x in 2027-28, which in our view are still above a fair level (~10x). We expect the company to continue paying a dividend even though the result is negative in the short term. However, the dividend yield alone is not enough for a good expected return, and considering the downside risk of the valuation and the uncertainty related to earnings estimates, we consider the current share price level unsustainable.