Translation: Original published in Finnish on 10/29/2026 at 8:40 am EET.

We lower our target price for Toivo to EUR 1.10 (from EUR 1.15) and reiterate our Accumulate recommendation. Toivo’s Q3 revenue and EBIT fell short of our estimates on lower-than-expected volumes, though profitability was good. We slightly lower our current-year earnings forecast and cut our 2027 forecast more clearly, having reviewed the project portfolio and lowered our assumptions for near-term project starts in light of rising interest rates. Toivo’s clearly increased market share and continued project starts nonetheless reflect good competitiveness in a difficult market. We still consider the valuation attractive, as investors can buy into the real estate portfolio below its net asset value (Q3'26: P/NAV 0.81x) and get the construction business thrown in for free. 

Volumes short of our expectations, but profitability good

Toivo’s Q3 revenue grew by 22% to 16.9 MEUR but missed our 21.5 MEUR estimate, as virtually no owner-occupied housing projects were completed in the quarter. EBIT rose to 1.9 MEUR (Q3'25: 1.6 MEUR) but missed our 2.4 MEUR estimate. The EBIT margin (11.3%) was in line with our expectations, however, which in our view indicates good project profitability, with the earnings miss due entirely to volumes. Earnings quality is also now good, as earnings are based almost entirely on cash flow rather than fair value changes, unlike historically. It is worth noting that Toivo’s revenue and earnings fluctuate significantly from quarter to quarter. The company’s competitiveness is currently good, and its share of privately financed apartment building starts in Finland has risen to nearly 10% this year.

Short-term earnings forecasts lowered

The company reiterated its guidance (revenue of 65–85 MEUR, EBIT of 6–11 MEUR), and we forecast EBIT of 7.3 MEUR for the year. We have reviewed the company’s current project portfolio and, given rising interest rates, lowered our assumptions for near-term project starts. As a result, our 2027 EBIT estimate falls by 15% to 8.8 MEUR, and our 2028 estimate by 5%. Our EPS forecasts fall more, as we also raise our financial cost estimates on rising interest rates and our minority interest estimates on new joint ventures. If the company can sustain its targeted growth, the leverage to net income is significant. Next year’s earnings growth already rests largely on ongoing and known projects, but growth in 2028 will require new starts in a slowly recovering market. Overall, Toivo enters next year from a good position with its current project portfolio.

Rising interest rates delay the housing market turnaround

In the short term, the real estate market is being held back by rising interest rates: the 12-month Euribor has risen by more than 1pp over the year to ~3.3%, and the 5-year euro swap rate to 3.4%. Housing transactions remain subdued, and house prices have continued to fall in official statistics. Institutional real estate investors have capital but are waiting for long-term rates to fall, which is hindering Toivo’s portfolio transactions. The Confederation of Finnish Construction Industries RT forecasts that privately financed apartment building starts will almost double next year, but in our view this looks optimistic given the current outlook. We see potential for a turnaround if the economic recovery continues.

Attractive valuation, but near-term uncertainty tempers buying appetite

Our sum-of-the-parts calculation indicates a share value of ~EUR 1.35, and Toivo trades below its net asset value per share (Q3'26: P/NAV 0.81x). On earnings, the valuation is stretched relative to peers (P/E 2026e–27e: 16x and 12x), but the multiples are lifted by a significant residential portfolio, whose required yield is lower than that of development operations. EPS would also benefit from operating leverage if Toivo can sustain earnings growth in line with its targets. The outlook for the coming years remains uncertain given rising interest rates and the slowly recovering housing market. Following the share price decline, we see the risk/reward as somewhat more attractive overall, with the housing market likely near its bottom.