Sunday, March 31, 2013

Helsinki Top 20

I use a service provided by via Pörssisäätiö to screen stocks listed in NASDAQ OMX Helsinki. I use the screen periodically to check where our holdings stand relative to other companies listed in Helsinki. Naturally I am also continuously screening for new investment ideas. Five out of our six positions are in Top 20 of my screen currently, which is not an accident, because the screen is designed to incorporate my preferences.

Currently the results of my personalized screen look like this:
Our positions are marked with prefix ">".

Rank Company (Score)
#1 Citycon (2,9)
#2 Technopolis (2,8)
#3 Norvestia (2,5)
#4 Nokian Renkaat (2,5)
#5 Sponda (2,5)
#6 Ramirent (2,4)
>#7 Fortum (2,4)
#8 Elisa (2,3)
>#9 Orion (2,2)
#10 PKC Group (2,2)
#11 Sampo (2,2)
>#12 TeliaSonera (2,1)
#13 Teleste (2,1)
#14 Outotec (2,1)
>#15 UPM (2,0)
#16 Sanoma (2,0)
>#17 Metso (2,0)
#18 Cramo (1,9)
#19 Elecster (1,9)
#20 YIT (1,9)

>#93 Nokia (0,7)

Average Score 1,4
Median Score 1,5
Worst Score 0,0 (#100 Incap)

Parameters used in screen (weight):
P/B est. 2013 (15%)
P/E 2012, est. 2013 (5%, 5%)
Dividend yield 2012, est. 2013 (5%, 10%)
ROA 2012 (10%)
ROI 3 year average est. 2013 (5%)
ROE 3 year average est. 2013 (5%)
Turnover increase in past 3 years, est. 2013 (10%)
Gross Margin 2012 (10%)
Profit Margin 2012 (10%)
Net Profit increase in past 5 years, est. 2014 (10%)

The used parameters emphasise profitability in broad sense (40% weight), attractive valuation (25%), growth (20%) and dividend yield (15%).

Top 5 consists of three property investment companies: Citycon, Technopolis and Sponda. They all seem to have quite different focus within Finnish property market.

  • Citycon is specialised in retail properties, especially in shopping centres, in Finland, Sweden and in the Baltic countries. It was founded in 1988 by several large Finnish Corporations and initially invested in office premises.
  • Technopolis core business idea is to combine business support services with modern, flexible, multi-user business environments. It was established in 1982 in city of Oulu to be the first technology village in Nordic countries. Its first customers included a circuit board factory and a number of other electronic manufacturing and design companies. The success of Nokia in both mobile phones and networks has been instrumental to the growth of ICT and electronics industry in Oulu region and has also fueled the growth of Technopolis in the past.
  • Sponda's office, retail and logistics properties are located in the largest cities in Finland and Russia. It has roots in the Finnish banking crisis as it was formed in 1991 by the Bank of Finland to take over the Finnish and foreign real estate properties held by the Skopbank Group together with its sizeable equity portfolio. After liquidation of its equity holdings to concentrate on real estate investment it was listed on Helsinki stock exchange in 1998.
Norvestia is an investment company with most of their stock holdings in various Finnish companies. Direct stock holdings made up 41,4% of their portfolio in end of 2012 while 37,8% was invested to funds and 14,4% to bonds.

Nokian Renkaat (Nokian Tyres) has roots in The Finnish Rubber Works founded in the year 1898, which have still a factory producing tyres in the town of Nokia in Finland. The company also has been part of the Nokia Corporation (between 1967 and 1988). “Nokian Renkaat” means literally “Tyres of Nokia”. Their ”Hakkapeliitta” series of winter tyres has been around since 1936 and is very strong and trusted brand in Finland. I for one am willing to pay premium for their tyres that are consistently ranked high in independent comparisons year after year.

I don’t have currently positions in the Top 5 companies, but I think they are all worth a closer look.
I don’t make changes to our portfolio that often and last time I checked two of my holdings actually were in Top 5: Fortum at #3 with score 2,7 and Orion in #4 with score 2,6. The screen relies on estimates about future. Those combined with volatility of stock prices means that you should not try to chase screens like this. Ultimately any investment decision should be based on much more than just looking at the current numbers and estimates of future numbers.