Translation: Original published in Finnish on 11/05/2026 at 09:28 pm EET

CapMan's Q3 report was subdued overall. The market environment has become more difficult during the autumn, and this increases the risks related to the success of fundraising efforts. We have slightly adjusted our estimates downwards and consequently revised our target price to EUR 1.90 (was EUR 2.1). At the same time, we lower our recommendation to Accumulate (was Buy), as the earnings improvement from recurring fees is likely to be weighted towards the end of next year.

Earnings clearly fell short of expectations driven by investment income

CapMan's revenue was  19.2 MEUR and exceeded our estimate of 18.1 MEUR, but the beat was driven by larger-than-expected carried interest income (3.6 vs. 1.0 MEUR). Fee income, which is critical for earnings growth in the coming years, fell short of our expectations (15.6 vs. 17.1 MEUR) due to exits and low transaction fees. New sales were subdued as we expected, and assets under management remained stable at 7.7 BEUR during the quarter.

Adjusted EBIT was 7.2 MEUR and fell well short of our estimate of 9.9 MEUR, which is explained by weak investment returns from the balance sheet (0.6 vs. 4.3 MEUR). The most important metric for the company's value, fee profit, decreased from the comparison period due to increased expenses and lower transaction fees, and in January-September, it is only marginally ahead of the previous year. This is a clear disappointment for us. However, the cost growth is explained by one-off items related to acquisitions, and the company has clearly had a fairly advanced transaction that, for one reason or another, did not cross the finish line. On the cost side, we view the decrease in headcount for the second consecutive quarter as an encouraging sign.

Earnings improvement postponed

CapMan reiterated its guidance, according to which assets under management and fee profit will grow in 2026. According to management, however, the market situation has become more challenging during the fall, particularly in the real estate sector, which increases the risks related to fundraising. We clearly lowered our 2026 estimates following the Q3 earnings disappointment. Based on current prospects, 2026 earnings will once again be subdued and far from their potential.

For 2027, we still expect significant earnings improvement, driven by new sales, improved carried interest, and recovering investment income. However, for recurring fees, the earnings improvement is weighted toward the end of the year as the final closures of the funds are completed. There has been no material change to our 2027 estimate, as lower headcount offsets the smaller size of the NRE4 fund. We remind you that the 2027 result will be "too good" as the company records significant retroactive fees in connection with fund closings. Our 2028 EPS estimate decreased by 10%, and in our view, it provides a good picture of CapMan's normal earnings potential. We still expect a healthy dividend stream, but we have revised our estimates slightly downward in line with our earnings estimates.

Stock is cheap only if earnings deliver

We find CapMan's valuation highly mixed. Based on the trailing 12-month earnings, CapMan's P/E ratio is over 20x, which is high given the weak earnings mix. As earnings growth kicks off, however, the multiples quickly fall to attractive levels, and on our 2027 estimates, the P/E is ~10x, and on the 2028 estimate, reflecting a more normal earnings level, the P/E is ~13x. A dividend yield of ~7% supports the expected return, although there is uncertainty regarding it due to the modest earnings level. The share is also very cheap relative to assets under management, which highlights the potential of the company's Management Company business. The weakened market situation will likely postpone the final fund closings to the second half of next year, which increases the risks related to earnings improvement. This, combined with lowered estimates, warrants a more cautious stance than before.