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Harvia  continues to over deliver and under promise with another excellent results in Q3/2020 and gives strong guidance to rest of the 2020 and beyond.

Harvia is a prime example of a company which benefits from this new era of pandemic investing: it is a pandemic beneficiary which has seen a strong Q2 and Q3, and Q1-Q3 greater than 2019 on increased new home improvement and repair projects as well as sales in the key global sauna and spa markets. Additionally, long-term growth expectations are very promising with operational and production capabilities increased.

Q3:

  • Revenue growth +68%
  • Organic growth +35.6%
  • Operating profit +21.8%

Q1-Q3, 2020:

  • Revenue +38.4%
  • Operating profit +18.6%

The share price is up 87.56% YTD.

On our Watch List since November 2019

The Armchair Trader watched the Q3 results and webcast call on November 6th. We have followed Harvia since November 2019 at €11 and 180 million market cap (now €19.6 and 366 million market cap) and ait was one of our top 34 recovery stocks.

Harvia has been a total success since it was listed in March 2018 at around €5 a share. The stock was trading at €19.6 on Tuesday November 17th at the time of writing. The All Time High (ATH) for the stock is €21.9. Price targets in Finland range between €22 – €24. We believe the company has just begun executing Harvia’s long-term plan of world domination in the sauna and spa market.

Strong M&A results

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 deliver. The M&A activity of the company has also been excellent in the last two years.

Harvia has added the CEO of EOS Rainer Kunz to its board. EOS Group brings Harvia experience of premium grade saunas and spas, now they have access to the luxury and premium markets in Germany, Switzerland, Austria and Russia, and this should drive the average purchase price per customer higher. KLAFS might be the next large German company to be acquired – there is a rumour in the sauna and spa market that KLAFS is for sale, CEO Pajuharju confirmed he is interested in the German firm after the very successful EOS acquisition, and there was his “no smoke without a fire” comment during the Q&A in the Q3/2020 webcast.


I believe that these situations will keep on coming – Almost Heaven Saunas in the US has opened up strategic sales channels in Home Depot. The health trend is growing and people are spending on their main and holiday homes. The hotel and spas sector will come back also – healthy balance sheet companies are using this time to upgrade their facilities.

Conservative analysts don’t understand Finnish growth stories

With greater equity coverage this hidden gem could well exceed the conservative Finnish analysts’ previous targets of €13 then €16 and now €22 – Harvia now have new US equity analyst house Raymond James following them, supplementing a few very conservative Finnish ones – especially with Harvia’s long term goals of 5% per annum sales growth (now 36%), 20% adjusted operating profits (almost there at 18.6%), and an over 60% dividend (achieved) payout ratio.

The sauna and spa market is popular and growing worldwide and Harvia is the global leader with 70 years of experience, a +14% market share and very strong sales growth in over 80 countries. The most recognised international sauna brand among Finnish, Swedish, German, Russian and American consumers, Harvia is getting overdue share price recognition. Now analyst targets are being lifted to the €24-26 levels, which we think is still too low with this kind of execution. My previous target was €20 euros per share in 2020 and I am now raising it to €30 in 2021.

What about the future for Harvia?

Harvia’s CEO Tapio Pajuharju is promising strong performance (what he calls “paradise in the backyard”) if you have been listening to him between the official lines for the last three to five years. With market volatility expected to pick up in the next months/years, I would personally be looking to add to my position below €20 euros down to €16.45. If the €15 level would break on the downside I would close my long position, but I strongly believe that the next target is €30 with this kind of performance. The dividend payments twice yearly make this a good time to hold/add/buy this stock for the short/medium/long term.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Raine Lahtinen

Raine Lahtinen

Raine Lahtinen has spent over 25 years in wealth management and trading. His active investment days started when he attended University of Miami 1987-1991 majoring in International Finance and Marketing. He has experienced the highs and lows of the stock markets since the 1987 crash, Dot.com bubble 2001-2002, the 2008 financial crisis and the current record breaking rally.

Since 1995, Raine has been based in Brussels, Belgium in Continental Europe as an international financial advisor and director of investments in various UK IFA firms. He has written many popular columns about markets and investments during his professional life. His passion is finding undervalued listed stocks. As a Finnish native he specializes on Nordic and US stocks.

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