Skip to content

Harvia: we revisit this sauna stock ahead of results this week


Harvia (HEL:HARVIA) closed at 25.3 Euros Monday February 8th. The 52-week range is 7.08 – 25.8. We are expecting another great quarter from Harvia especially in the US market. The Finnish analyst Petri Kajaani of Inderes will likely increase his target prices again, but after the fact. He published an excellent research report on Harvia and the sauna and spa market on November 26th 2020, but it is 40 pages long and in Finnish. I will happily translate for any interested USA/UK institutional analysts.

I am expecting Harvia Q4 results very close to Q3 level.

The Armchair Trader will watch the Q4 results and webcast call live on February 11th here in Finland. We have followed Harvia since November 2019 at 11 Euros and 180 million market cap (now 25.3 Euro and 473 million Market Cap) and Harvia was one of our top 34 COVID recovery stocks. The stock has now been officially moved to midcap level as of January 2021 on Nasdaq Helsinki. Once Harvia has executed their three to five year plan with organic growth and M&A activity in this fragmented industry, they will be in the large cap section in the Finnish stock market.

Harvia’s successful IPO

Harvia has been a total success since it was listed in March 2018 at around 5 Euros a share. The stock has been trading between 23-25 Euros since the middle of December 2020 – creating very nice base to grow to new highs. The All Time High (ATH) for the stock is 25.8 Euros. Price targets in Finland range between 24 – 26 Euros. We believe the company has just begun executing Harvia’s long-term plan of world domination in the sauna and spa market.

Strong track record in M&A

The company has a very experienced management team (CEO Tapio Pajuharju and CFO Ari Vesterinen), which knows its way around international distribution and sales channels. The company does not rely on organic growth alone, which is the hardest part to grow. The M&A activity of the company has been excellent in the last two years also.

Harvia is proposing that five members be elected to the Board of Directors, and Ia Adlercreutz, Olli Liitola and Sanna Suvanto-Harsaae be reappointed. The Shareholders’ Nomination Board is proposing that Hille Korhonen and Anders Holmen be appointed as new members of the Board of Directors. All proposed persons have given their consent to the appointment. They are independent of the company and independent of the major shareholders of the company.

Korhonen, strengthens the expertise and experience of the board in production and logistics. Holmén strengthens the board with experience of mergers and acquisitions and private equity, he also has strong experience from family-owned companies.

Harvia also added the CEO of EOS Rainer Kunz to the board after the EOS acquisition in 2020 – I believe he will leave his place on the board after the annual meeting in April, 2021. EOS group brought Harvia the experience of the beyond average saunas and spas market – now they have access to the luxury and premium markets in Germany, Switzerland, Austria and Russia – this should drive the average purchase price per customer higher.

KLAFS might be next large German company to be acquired – there is a rumor in the sauna and spa market that is for sale, and CEO Pajuharju confirmed after the company’s very successful EOS acquisition – that he is interested – it was his famous “no smoke without a fire” comment during Q&A in Q3/2020 webcast.

Also on the horizon may be TylöHelo (a Swedish competitor) which might be something to consider since Ari Vesterinen was the CEO of its Finnish operations before joining Harvia.

Long-term growth

We believe that these results will keep on coming – Almost Heaven Saunas in the USA has opened up strategic sales channels in Home Depot and COSTCO (large hardware chains). It supports the fact that this health trend is growing and people are spending on their main and holiday homes. The hotels and spas will come back also – healthy balance sheet companies are using this time to upgrade their facilities.

With greater equity coverage this hidden gem could well exceed the conservative Finnish analysts’ previous targets of 13, then 16, now a 22 Euro price target – now Harvia has a second tier US equity analyst house Raymond James following them, including a few very conservative Finnish ones – their long term goals were 5% per annum sales growth (now 36%), 20% adjusted operating profits (almost there at 18.6%), and over 60% dividend pay out ratio (achieved).

The sauna and spa market is popular and is growing worldwide and Harvia is the global leader with 70 years of experience, +14% market share and growing very strongly sales in over 80 countries. The most recognised international sauna brand among Finnish, Swedish, German, Russian and American consumers is getting overdue share price recognition. Now analyst targets are being lifted to 24-26 Euro levels, which we think is still too low with this kind of execution.

The future for Harvia

The CEO Pajuharju is promising strong performance if you read between the official lines. The next three to five years will likely see strong organic growth and M&A. With markets going to be volatile in the next months/years – I will add to my position below 23 euros until 19 Euros. If the price hits 19 Euros it would mean a break on the downside and I would close my long position, but I strongly believe that the next target is 30 Euros with this kind of performance. The dividend payments twice  a year make this a good time to hold/add/buy this stock for the short/medium/long term.

Some readers have been asking us which brokers provide access to Nordic stocks from the UK: we have been able to identify eToro and Saxo Markets as two brokers offering this access. We will name more as we hear from them.

Like this article? Sign up to our free newsletter.

This article does not constitute investment advice. Do your own research or consult a professional advisor.

'How to' Guides

Our latest in-depth company reports

Detailed reviews of selected companies and investment trusts.

On the podcast

Sign up for great investing stock tips

Thanks to our Partners

Our partners are established, regulated businesses and we are grateful for their support.

FP Markets
CME Group
Back To Top