Challenging 2024 as key target market shrinks

Ahead of Inderes’ Q4 report, we reiterate our fair value range of EUR 17-19 and make small estimate cuts owing to a prolonged soft market outlook. Based on recent newsflow, we sense that more companies are leaving than entering the Finnish stock market. We therefore think Inderes’ 2024 growth rests on its ability to increase its market penetration in certain areas (i.e. the overall Swedish market and to some extent Finnish AGMs).

Q4 expectations: December sales growth flattening, Q4 margin should grow

Inderes’ Oct-Nov sales were in line with our expectations. We forecast Q4 sales of EUR 4.5m, implying December sales of EUR 1.3m (Dec y/y growth down to c. 5%). For Q4 EBITA, we forecast EUR 0.5m (margin of 10.8%) compared to EUR 0.2m a year ago. We think the key growth driver for 2024 is the upcoming AGM season, an area we think still offers the company higher penetration potential. Thus, we will focus on the management’s comments on AGM service orderbook growth. Also, comments about new sales in the Swedish market remain an important focus area. We think AGM and IR event services represent the company’s lowest hanging fruit in Sweden.

Market headwinds persist; recent tender offers indicate declining main market

The decline in the Finnish stock market’s valuation has prompted a spike in public tender offers recently, but the IPO market remains subdued. Given Inderes’ high market penetration within research and IR events, we think market headwinds will persist throughout 2024. We also think new market entrants are the best prospects for IR solution services, which suggests to us that growing this small but scalable business might be challenging.

Minor estimate changes; fair value range remains EUR 17-19

We slightly reduce our estimates owing to a continued challenging market. The company now trades at a 2024E EV/EBITDA of 12x, which we think is slightly elevated relative to the peer group.