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Nyhetsflöde Siili Solutions

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4/15/2024 5:23:38 AM - Siili Solutions: Passing the low point - SEB - We maintain our estimates and fair value range ahead of Siili’s Q1 report. We think Q1 will mark the low point in terms of organic growth, which we see picking up towards year-end. Looking beyond 2024, we see healthier growth driven by AI-based demand. The key short-term risk still relates to over-capacity in the market and thus price competition. Silli’s current EV/EBITDA of 5x is low given its capital-light business in a structurally growing market.
2/28/2024 6:25:43 AM - Siili: Costs in control even at the bottom of the cycle - SEB - Despite slow momentum on the top line, Siili’s H2 and Q4 report showed that the costs can be managed reasonably well and profitability and cash flow stayed at a decent level even at the bottom of the cycle. Yet, we end up forecasting a bit slower turnaround and higher salary inflation with 2024E EBITA down by 8%. Fair value range of EUR 15-17 reiterated.
2/27/2024 7:20:13 AM - Siili Q4: Organic growth slows to -5%, but profitability above expectations - SEB - Siili's Q4 sales declined more than we had expected, being disproportionally affected by the market slowdown. However, thanks to decisive cost measures, Q4 EBITA topped our estimate. The sales guidance mid-point is well in line with our estimate for 2024, but the EBITA guidance indicates modest pressure onour estimate. At first glance our take is neutral, but we continue to flag the low trading multiples.
2/13/2024 6:29:54 AM - Siili: Signs of the market turning - SEB - Ahead of Siili’s Q4 report, we reduce our estimates slightly as we expect the turnaround to take longer than previously expected. At the same time, we remain confident that the digital transformation market is returning to a growth track. Our fair value range remains EUR 15-17 as we justify a fair valuation well above the current level of 2024E EV/EBITDA of 5x.
1/10/2024 6:27:42 AM - Siili Solutions: Long-term growth fundamentals well in place - SEB - At SEB’s Nordic Seminar, Siili's CEO provided an overview of the company, remarking that the fundamentals of underlying market growth remain unchanged and that the company is sticking to its medium-term target of delivering 20% growth (10% organic). The AI revolution is seen as positive for the industry as customers are likely reinvesting the AI drive productivity improvement into new digital development. Also, we note that the market seems to have stabilised.
10/25/2023 5:24:01 AM - Siili: Reacting to tough market situation - SEB - As we had expected Siili saw a continued market slowdown in Q3. The tough market with price pressure requires further savings measures, which were already visible in Q3. The market for digital IT services will improve at some point. However, calling the market turnaround is difficult in the current blurry visibility. We pencil in 2024E growth of 7%, which is likely to be tilted to H2. Our fair value range remains unchanged at EUR 15-17.
10/24/2023 7:18:54 AM - Siili Q3: Misses our lowered estimates - SEB - Siili's Q3 headline numbers came in somewhat below our lowered estimates. The organic growth was negative -4% while we had input -2% organic growth. However, the positive note goes to cost savings measures, which resulted in a relatively small miss in EBITA compared to the delta in topline. Guidance is being repeated, but at first glance on the Q3 performance trend we think the full year is likely to be closer to the lower end of guidance range.
10/9/2023 5:36:29 AM - Siili: Slow quarter expected, but the market will turn - SEB - As we think the Finnish IT consultant market has remained soft ahead Siili’s Q3 report, we make another round of marginal cuts to our estimates but remain above the lower end of the guidance range. We expect negative Q3 organic growth, due to a solid comparison base. On a raised risk-free rate, our DCF-based fair value range falls to EUR 15-17 but is still significantly above the current share price after its recent stumble.
8/17/2023 6:19:25 AM - Siili: Shifting from growth to efficiency - SEB - The expected slowdown hit Siili’s Q2 more severely than we had projected. Despite the hefty miss in Q2 EBITA, our 2024-25 EBITA estimates are down only 4-3%. We find the costs adaptable to the slower market momentum and remain confident that the digital development market will pick up again. Hence, with low risks in the case we justify a higher valuation. Our fair value range comes down a notch to EUR 16-19 (from EUR 17-19).
8/16/2023 6:29:14 AM - Siili: Q2: Below our estimates, organic growth slows to 3% - SEB - Siili's Q2 came in below our estimates as the slowdown in organic growth was faster than expected. As noted in touch with a profit warning earlier in the summer the market environment remains tough with tight pricing. Although the Q2 deviation will put further pressure on estimates we note that the initiated efficiency measures should offset the full-year estimate revisions. Given the decreased share price we believe in a flat/slightly negative reaction on the report.
8/2/2023 5:28:54 AM - Siili: Market moves from boom to overcapacity - SEB - Following Siili’s profit warning we have significantly cut our 2023-24 EBITA estimates. The tight pricing environment coupled with salary inflation is pressing profitability. Yet, we think the digital consultancy market will remain in structural growth and is set to recover again, like it did during the pandemic. By 2025 salary inflation should have eased, allowing margins to bounce back. Fair value range lowered to EUR 17-20 (20-23).
7/13/2023 11:39:31 AM - Siili: Profit warning following increased price competition - SEB - Siili lowers its FY/23 guidance by chopping the EBITA guidance range mid-point by as much as 27%. The sales guidance mid-point falls just 4%. The clearly weaker than expected profit warning looks to be due to intensified price competition and cost inflation not being fully transferred to prices. The new EBITA guidance mid-point is c. 24% below our current EBITA estimate, meaning significant pressure on short-term estimates. Siili reports its Q2 numbers on 16 August.
6/7/2023 5:41:06 AM - Siili: Finnish Tax Administration frame agreement likely to have a material sales impact - SEB - Siili has been selected as a supplier in a Tax Administration frame agreement tender. The estimated value of the six-year frame agreement (in areas relevant to Siili) is close to EUR 90m. Although the value splits among chosen suppliers we note that Siili was ranked number one in in two out of four expertise areas and hence should receive material share of the total value. Tax Administration is a new client for Siili, meaning the deal should have material positive impact.
4/26/2023 5:18:22 AM - Siili: Sufficient growth for improving EBITA - SEB - Siili delivered a Q1 report well in line with our estimates and hence our estimate changes remain stylistic, with minor upward revisions following an acquired team in Kuopio. Despite the uncertain macro outlook, we continue to see demand for digital transformation being healthy enough to allow sufficient growth for rising profits in FY23 despite inflation. We repeat our fair value range of EUR 20-23.
4/25/2023 7:21:27 AM - Siili Q1: Inline report with organic growth at 9% - SEB - Siili's Q1 sales and EBITA came in marginally above our estimates. As expected the organic growth slowed down a bit from the strong 2022 to 9% in Q1. With guidance intact and employee headcount well aligned with our Q2 assumption, our first read is that the estimate revisions will be muted. All in all, a good report at first glance given the increased macro uncertainty.
4/14/2023 6:01:34 AM - Siili: Slower, but still healthy growth - SEB - We expect Siili’s organic growth to slow down slightly in Q1 and FY 2023. The comparison period numbers are relatively tough and margins are likely to be under pressure due to an increased headcount and salary inflation. However, assuming no sudden slump in demand we think the company can adapt its capacity and deliver healthy margins for the year. We repeat our fair value range of EUR 15-17 and note that the EV/EBITDA for 2023E is just 7x.
2/20/2023 7:20:19 AM - Siili: Temporary lower utilisation visible in margin - SEB - Q4 marked the first quarter for a long time when Siili’s EBITA margin declined slightly y/y. This was due to a less-than-optimal talent-demand match, which resulted in weaker utilisation and increased outsourcing. We see this as a temporary challenge and the demand outlook remains healthy, although macro uncertainty is elevated. Our fair value range for Siili is intact at EUR 20-23 with the mid-point corresponding to a 2023E EV/EBITDA of 10x.
2/17/2023 8:07:47 AM - Siili Q4: Small miss in EBITA, we are close to guidance mid-point for 2023 - SEB - Siili's H2 report shows that Q4 sales and EBITA came in slightly below our estimates. The organic growth was some 10% in Q4, which marks a slowdown after the solid performance in Q1-Q3. The guidance mid-point suggests 18% EBITA growth in 2023. We stand in line with sales guidance for 2023, but have input 7% higher EBITA. DPS came in at EUR 0.20 while we had input EUR 0.30.
2/3/2023 12:48:47 PM - Siili: Still expecting a FY/22 sales guidance beat - SEB - Ahead of Siili’s Q4 report, we slightly cut our EBITA estimates on increasing wage inflation pressure but continue to think the company will lift its FY22 sales guidance. Apart from salary inflation causing margin pressure, our case remains intact: the market for digital IT services is still growing surprisingly healthily and Siili has room to improve the internal efficacy of its core domestic operations. We retain our fair value range of EUR 20-23.
10/28/2022 7:29:38 AM - Siili: Another sales beat - SEB - Siili’s Q3 was a continuation of Q2, i.e. sales growth coming in higher than expected but at the same time margin improvement in the inflationary environment becomes more challenging. The main question is how long the demand for digital transformation services will hold up in the upcoming downturn. Although we input a slowdown in growth in 2023, we continue to see the shares as attractively valued and repeat our fair value of EUR 20-23.
10/27/2022 8:39:15 AM - Siili Solutions Q3: Organic growth of 20% above our estimate, EBITA in line - SEB - Siili continued to deliver sales above our forecast in Q3. The organic growth accelerated to 20%, while we had input 14% organic growth. EBITA hit our estimate, implying that the margin was somewhat weaker than expected. Looking ahead, we note that headcount is up 15% y/y which is in line with our growth estimate for Q4. With this we find that the company could well increase its guidance, which was still unchanged, towards the year end.
10/13/2022 6:42:58 AM - Siili: Continued double-digit organic growth - SEB - Ahead of its Q3 business update, we expect Siili Solutions to enjoy continued double-digit organic growth, albeit a bit slower pace than in Q2. Profitability is seasonally softer, but should still improve y/y. We continue to see the shares as attractively valued given the structural growth in the underlying market and the relatively limited downside risk. We trim our fair value range to EUR 20-23 (previously EUR 22-24).
10/4/2022 1:22:23 PM - Siili: Acquires public sector specialist Haallas - SEB - Siili just announced the acquisition of Haallas, a small Finnish public-sector-focused digital IT service provider. Using 2021 numbers, Haallas would have added 6% to Siili's sales and 7% to its EBITDA. The final valuation will be based on 2022 audited numbers, so the valuation multiple can only be estimated at this point. Our initial take is that the valuation multiple is close to Siili's current EV/EBITDA multiple of 6-7x.
8/18/2022 4:21:49 PM - Siili: Ticking the boxes of investment case - SEB - We find that Siili’s H1 report confirms that the case is advancing as expected. The Core operations continue their gradual internal improvement, with profitability still well below potential. Meanwhile the key growth drivers are the international operations, where Siili Auto and Supercharge are delivering robust growth. We think the next trigger will likely be another move in M&A, for which the company has some EUR 40-50m capacity, we estimate.
8/18/2022 7:12:00 AM - Siili Q2: Sales beat, EBITA in line - SEB - Siili's Q2 performance was broadly in line with the minor deltas being on the positive side. We flag the strong organic growth of 17% and healthy profitability which is proof of the continuing turnaround of the Core operations. Guidance remains unchanged and at first glance it seems that the company will deliver to the upper end of the guidance range. Given the discount valuation to the peers, we think a positive reaction to the report is justified.
8/14/2022 8:49:26 PM - Siili: Continuing improvement, M&A could be close - SEB - We expect Siili to have continued the improved earnings momentum in Q2. We think that the Core operations margin remains well below its potential and so we will focus on management’s comments on this area. Although increasing macro uncertainty could result in a calmer market for digital IT Services, we think the overall market will remain in growth. Hence, we find Siili attractively valued at EV/EBITDA of 7x. We trim our fair value range to EUR 22-24.
5/11/2022 2:25:47 PM - CMD takes: public sector growth; Supercharge expansion; M&A - SEB - As we expected, Siili hiked its strategic targets at today's CMD. Our estimates are broadly in line with the new targets and we make no changes for now. In addition to targeting organic growth of 10%, Siili plans 10% annual growth via acquisitions, which will require fresh capital. We think the current EV/EBITDA overlooks Siili's growth and the turnaround in the Core operations. Our fair value range for Siili is EUR 23-25.
5/11/2022 6:50:22 AM - New financial targets ahead of today's CMD - SEB - Siili released new financial targets for 2023-2026 ahead of today's CMD. Looking our current estimates we are in line with the new targets, except for the planned acquisition impact on growth. The new growth target of 20% assumes some 10% organic growth and 10% acquisition impact. To fund the planned acquisitions Siili is considering directed share issue of 12-14m which compares to current market cap of EUR 98m.
4/29/2022 8:28:52 AM - Siili: Strong organic growth with earnings leverage - SEB - Siili’s Q1 report confirms that the company is well on its way to deliver its 2022 financial targets, specifically growth for both organic sales and EBITA of at least 10%. Siili will host its CMD on 11 May, and we note that the market momentum is enough strong for the company to set new more ambitious financial targets for the next strategic period. We raise our fair value range to EUR 23-25, and note that the mid-point suggests upside of at least 60%.
4/28/2022 11:33:16 AM - Siili Q1: Solid report as Core operations prove turnaround - SEB - Siili's Q1 came in well above our expectations with organic growth accelerating to 14%. Importantly, the strong performance was thanks to Core Operations, which has been lagging some market peers. Supercharge continued its strong growth (16-17% we estimate) and the acquisitions seems to have been successful. Guidance is repeated but the range is relatively high and we think estimates will move towards the upper end of the range.
4/20/2022 5:38:02 AM - Siili: Expecting continued organic growth momentum - SEB - Our investment case on Siili is unchanged despite increased geopolitical tensions ahead its Q1 business update. We have made some minor negative estimate revisions because we think some customers might take a more cautious stance on their digital investments. We continue to see Siili as attractively valued given the strong demand for digitalising consulting. Our fair value range remains at EUR 20-22, with the mid-point suggesting >40% upside.
2/18/2022 8:29:36 PM - Siili: Looks set to beat its strategic targets in 2022 - SEB - Siili’s Q4 confirmed to us that the company is accelerating its growth to >10% and taking its EBITA margin to >10% (i.e., delivering its strategic targets). The portfolio and acquired companies continue to perform solidly, while we believe the strong momentum enjoyed by the Finnish digital consulting market should help Siili’s core operations back to higher growth. We think the valuation is attractive and repeat our fair value range of EUR 20-22.
2/18/2022 8:00:23 AM - Siili Solutions Q4: Headline figures broadly in line - SEB - Siili's H2 sales and EBITA came in broadly in line with our estimates, but the deviations were marginally negative. The organic growth in H2 was healthy at 11%. Looking at the guidance, we note that our pre-report estimates are close to the upper end of the guidance range.
2/9/2022 8:08:07 AM - Siili Solutions: Growth attractively valued - SEB - Ahead of Siili’s H2 report, we raise our sales estimates as we find the market momentum for digital IT service consultants to be strong. Siili’s international operations and portfolio companies are performing already strongly, and it seems Core operations are expected to return to healthy growth as we look towards 2022. The valuation looks attractive with a 2022E FCF yield of 11%, and we raise our fair value range to EUR 20-22 (EUR 19-21).
10/28/2021 7:18:27 AM - Siili: Back on track with organic growth - SEB - Siili’s Q3 business review confirmed that the company is accelerating its organic growth after couple of quarters that were impacted by Covid-19. In Q3 the company was successful in its recruiting despite the challenging market, which increases our confidence that the accelerated growth will continue. We continue to highlight that the company’s cash flow yield for 2022E is at 12% and repeat a fair value range of EUR 19-21 for the share.
10/27/2021 11:48:02 AM - Siili Q3: Growth in line, minor miss in EBITA owes to successful recruiting - SEB - Siili's Q3 sales came in line with our estimate. Although the profitability was marginally below our estimates we note that this was due to accelerated recruiting, which is crucial for the future growth. The first read is that the international operations, including earlier this year acquired Supercharge, are performing very well.
10/18/2021 12:26:03 PM - Siili: Expecting 31% growth, driven by acquisition and Portfolio units - SEB - Siili publishes its Q3 management review on 27 October. We believe the quarter’s performance will continue the trend seen in H1, i.e. reported growth driven by Siili Auto, Vala Group and especially the recently acquired international Supercharge while the growth in Siili’s Core operations remains relatively muted. We keep our estimates intact and fair value range of EUR 19-21.
10/13/2021 7:20:56 AM - Siili: The new CEO comes with good CV - SEB - Siili names Tomi Pienimäki as the new CEO. At first glance we find Mr. Pienimäki's background a strong fit to Siili. Pienimäki has served as a CEO of Vincit, a close peer, in 2015-2018, i.e. a period when the company increased its sales by 159% and was selected as Best Place to Work in Europe. The new CEO also has a strong background in buy-side of digital services with the latest position as Finnair Chief Digital Officer.
8/24/2021 5:47:10 AM - Siili Solutions: Changes CEO - SEB - Siili just announced that the current CEO, Mr. Somerma, will step down and Pasi Ropponen has been appointed as acting CEO. Siili re-shaped its strategy roughly a year ago and the company is on track to improving profitability of Core with the latest acquisitions performing strongly. However, our take is that the company has higher growth ambitions in Siili Core, which has experienced somewhat slower growth than the closest peers during the pandemic.
8/19/2021 6:53:30 AM - Siili Solutions: Supercharge & Auto performing, Core lagging - SEB - Siili’s Q2 numbers were a bit mixed. Importantly, the Automotive business is recovering sharply and the first few months of the acquired Supercharge prove that the robust growth has continued. However, the Core operations are still feeling the impact of the pandemic. Our EBITA estimates decline slightly and our fair value range falls back to EUR 19-21, which still implies reasonable upside to the current valuation.
8/18/2021 7:00:36 AM - Siili Solutions H1: Small miss in Q2 due to Core operations - Siili's H1 was slightly below our estimates. With Q1 headline numbers already released, the deviation related to Q2 performance, which has been weaker than expected for Siili's Core operations, where COVID-19 continues to have a negative impact. On a positive note, the recently acquired international Core unit, Supercharge, is performing well.
8/11/2021 5:52:45 AM - Siili Solutions: Recovery in Auto and Supercharge in focus - SEB - We have strong confidence that Siili’s H1 will show clear improvement versus the comparison period numbers. The peers have already reported decent growth and Siili’s Auto unit should have picked up from pandemic lows. We will also focus on the integration of Supercharge which has good value-creation opportunities, like in the case of VALA Group. We have integrated SEB ESG analysis to Siili with a positive impact on valuation.
6/22/2021 7:17:54 AM - Siili Solutions: Launching new offices outside Helsinki region - SEB - Siili is launching new offices in Jyväskylä and Joensuu to strengthen its position outside Helsinki region. The aim is to recruit 30-50 employees to both cities during the coming years, implying 7-12% growth in the headcount. We estimate 8-10% organic growth for 2022-23. In addition, we note the cost of employees outside Helsinki is clearly lower, so we see the move as supporting margin expansion should demand be strong enough to allow high utilisation.
4/30/2021 5:19:13 AM - Siili Solutions: Supercharge to give growth and profit boost - SEB - Siili’s Q1 did not offer major surprises. Our key read is that Supercharge has continued its robust growth, making the acquisition look even more attractive. The case remains intact and Siili’s Core operations and Auto are expected to return to growth as the pandemic eases. With minor estimate changes we keep our fair value range intact at EUR 19-21.
4/29/2021 10:46:45 AM - Siili Solutions Q1: Well in line, supercharge having stronger contribution than expected - SEB - Siili’s Q1 numbers came in well in line with our estimates with EBITA marginally above. The organic growth was flat, which was slightly less than we had estimated. Yet, we note that Q1 had strong comparable numbers and COVID-19 situation still weighs. On the other hand the acquired Supercharge is contributing with stronger than expected to the numbers, making the deal look even better.
4/22/2021 5:42:21 AM - Siili Solutions: Q1 growth still muted but then kicking off - SEB - Ahead of Siili’s Q1 management review, we believe the structural growth case continued to weather the pandemic situation well. The recent international growth acquisition, Supercharge, will be included from the end of February onwards, but will boost growth for the next quarters. We think that the risks have declined, and therefore we have lowered our WACC to 9.0% and lift our fair value range mid-point by EUR 3.0.
2/21/2021 10:26:47 PM - Siili Solutions: Case intact despite minor miss in Q4 sales - SEB - Siili’s H2 results showed that the company continued to be negatively impacted by a halt in the Automotive sector. We remain confident that the client vertical will revive and expect the company to reach pre-Covid levels by 2022. Our fair value range remains intact at EUR 16-18. We emphasise our belief that, given the strong market growth fundaments, Siili will deliver healthy growth on a very asset light business model.
2/19/2021 7:38:43 AM - Siili Solutions: H2: Year ends with strong profitability, minor sales miss - SEB - Siili posted H2 sales of EUR 39.3m and EBITA of EUR 3.5m, implying that Q4 sales missed marginally our expectation and EBITA was above our forecast. The company’s sales guidance mid-point is broadly inline with our 2021 expectations. However, in terms of EBITA we stand at the upper end of the guidance range.
2/10/2021 8:54:06 AM - Siili Solutions: Recent transaction to unlock value - SEB - We turn our focus beyond Siili’s H2/20 report on 19 February to 2021-2022 and include the recent Supercharge acquisition in our numbers. We find the transaction value-adding and hike our fair value range for Siili to EUR 16-18 (previously EUR 13-15). We also point out that the market for digital IT services remains robust and COVID-19 is accelerating the demand growth.
1/15/2021 7:53:58 AM - Siili Solutions: Acquires additional stake in VALA Group - SEB - Siili just announced that the company acquires an additional 21% stake of VALA group taking the ownership in the subsidiary to 81%. The transaction multiple was in line with the initial transaction, roughly 8.5x we estimate, well below Siili's. VALA was already fully consolidated in the group numbers, i.e. no major impacts on the numbers. Conclusion is that the synergies between the two companies have played out well and we can expect VALA group solid growth to continue.
10/28/2020 7:00:01 AM - Siili Solutions: Core also affected by COVID-19 - SEB - Growth slowed down on COVID and Siili Auto<br>After very resilient H1 performance, Siili’s Core operations were hit by the effects of COVID-19. With customers downsizing projects and holding back on launching new projects, the growth in Siili Core flattened and the negative impact hit later than we had assumed. However, we remind that Q3 is a seasonally quiet quarter from which we cannot draw far-reaching conclusions. We also remain confident that demand on the Automotive side will cheer up after few months of normalised car sales and that growth will normalise in 2021.
8/5/2020 4:50:36 PM - Siili Solutions: Case remains despite temporary hit in Auto - SEB - Q2 sales to decline slightly on temporary squeeze on Automotive customers<br>We expect Siili’s H1 sales to increase by 4% to EUR 42.3m but decline 3% in Q2. Our H1 EBITA estimate is EUR 2.6m. We find that Siili Core and VALA Group have performed relatively well. However, we think the Q2 sales decline owes mainly to Siili Auto, where we believe customers have safeguarded their cash flow in the time of uncertainty. However, based on the recent signs from the automotive sector sales, we believe the negative impact will be temporary and the demand should revive towards the year-end. Therefore, in Q2 our focus will be on management’s comments around the client sector’s recovery.