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First, lets start with this week’s announcement from Harvia:

Harvia Plc has today received the following notification pursuant to Chapter 9, section 5 of the Securities Markets Act (the ”SMA”), according to which Onvest Oy, a company controlled by Marja Toivanen, has sold a total number of 1,483,990 Harvia Plc’s shares in an accelerated book-building process (the “Share Sale”). In connection with the Share Sale, Marja Toivanen’s indirect holding of the shares and votes of Harvia Plc has on 1 September 2021 decreased below 5 percent.

A shock to some investors, but is it a great buying opportunity?

The stock had traded to an All Time High €64.1 on August 11th before a Q2/2021 earnings release next day. The 52 week range is 14.75 – 64.1 and on September 2nd the stock traded between 50.8 – 54, down -12%, but closing down only 8.6% at 53.3 after the analyst reaffirmed their target price of 64 with a BUY rating. Even CEO Tapio Pajuharju pitched in buying 1,000 shares worth at 51,900 with an average price of 51..9. I think the €50 level will hold and I will be adding more if the price breaks further. I will use €40 as my stop/loss, but I am quite certain this will not happen.

The danger of Investing in medium/small listed companies who are public listed and family owned

There is an increasing danger or even fear that Harvia itself might be bought out from the Finnish stock exchange. Many anticipate a buyer from the USA where Harvia is spreading like “tumble weed” over 70% per year growth under its Almost Heaven Saunas brand (doubling production sites) and with great partners like Home Depot and COSTCO. CEO Tapio Pajuharju used the term “Paradise in the back yard” and this trend will continued in the USA and UK as part of the wider wellness trend.

Klafs was sold January 6th – Harvia was involved, but declined

The acquisition of Klafs by Dutch private equity firm Egeria has the scope to change the whole sauna industry, since there are not many public listed “pure play” sauna and spa companies listed in the world. Harvia is the only one that is publicly listed.

Maybe it was too soon for Harvia after the EOS (a private company) purchase that closed in 2020. Or maybe the price asked was too expensive – we will never know. Both companies are clear leaders in the sauna and spa market with both having about 15% of the global sauna heater market.


The Klafs deal would have really established Harvia as the clear leader in the industry. Klafs was also a private company – like EOS Group – and operates very much in the same region: Germany, Austria and Switzerland. Harvia recently bought Kirami (Finland) which will continue as an independent brand like previous acquisitions of Harvia Group: EOS Group (Germany) 2020, Almost Heaven Saunas (USA) 2018 and Sentiotec (Austria) 2016.

Founded in 1952, Klafs is the world’s largest manufacturer and integrator of high-quality integrated sauna systems, steam baths and complementary products and services. Klafs sells products in the private as well as commercial segment (incl. hotels, spas, fitness studios, etc.).

Harvia prides itself on its large retail investor ownership base

Harvia had over 23,000 shareholders at the end of 2020, up from 2,071 in 2018. The increase is explained by individual, smaller stockholders discovering the share. Still, 43,9% are nominee registered and outside Finland, Onvest Oyj (previously the anchor Finnish Investor at 12,3%, now 4.4%), Finnish individual investors at 23,8% Finnish banks and insurance companies at 11,1%, Finnish private corporations at 11,2% and Harvia’s own shares (for director stock options) at 0,3%.

In my view German shareholders have decreased their holdings in Harvia after the EOS Group deal, Finnish individual stockholder’s have really piled into the stock, with over 8,000 new investors. The Finnish banks and insurance companies have indulged in some tactical portfolio management with some small profit taking. Some Finnish private investment companies increased their stakes of the company. There are a few very famous ones like Kyosti Kakkonen with his Joensuun Kauppa & Kone Oy.

Egeria and the private equity angle

Egeria is an independent pan-European investment company founded in 1997, which focuses on medium-sized companies. Egeria invests in healthy companies with an enterprise value between €50 million and €350 million. Egeria is not an issue for Harvia and it is possible Harvia will buy parts of Klafs from them in the years to come. Harvia’s market cap is now close to €1 billion and the business continues to expand. The premium would be sizeable if somebody would like to buy it offthe Nasdaq Helsinki stock exchange. I would estimate the premium for Harvia to be close 70-100%.

A UK company like 3i Group’s private equity arm might be one contender. On September 22nd, 2020 3i invested in GartenHaus to build the leading European platform for home and garden projects. It spent £60m for the majority stake in A-Z Gartenhaus GmbH (“GartenHaus”), an online leader in garden homes, sheds, saunas, and related products in the DACH region. Klafs is also a DACH region play as is EOS Group. My money is on a major US private equity acquisition in two to three years. I hope that Harvia stays public and the market cap will double if it does.

We have followed Harvia since November 2019 at €11 and €180 million market cap (now €53.3 and €996 million market cap) and it was one of our top 34 COVID recovery stocks. The stock has now been officially moved to midcap level on Nasdaq Helsinki. When Harvia have executed their three to five year plan with organic growth and M&A activity in this fragmented industry they will likely be in the large cap section in the Finnish stock market.

Strong M&A results

The company has very experienced management team (CEO Tapio Pajuharju and CFO Ari Vesterinen), which knows it’s 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.

I 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. The health trend is growing and people are spending on their main and holiday homes. The hotels and spas sector will come back too – 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: first 13, next 16, third 22 and fourth 33, fifth 51 and now a 64 price target – Harvia now has second tier US equity analyst Raymond James following them.

The Sauna & Spa market is popular and growing worldwide and Harvia is the global leader with 70 years of experience, 14-16% market share and growing sales in over 80 countries. The most recognized international sauna brand among Finnish, Swedish, German, Russian and American consumers is getting overdue share price recognition.

The future

The CEO Tapio Pajuharju is promising strong performance, if you listen to what he says between the official statements. The next three to five years will see strong organic growth and M&A. With markets likely to be volatile in the next months/years, I will always add to my Harvia position below €55 until €50. If it reached €40 this would represent a break to the downside and in this case I would close my long position, but I strongly believe that the next target is €70 with this kind of performance. The dividend payments twice a year make’s 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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