Searching for new investments: Inission

I first came to know of Inission after reading Aki Pyysing’s Sunday column. But I didn’t pay it much mind until recently when I acquired some extra cash and started searching for new investment ideas and even then Inission wasn’t in the initial list of ideas.

Reason I got interested in Inission is because they own 41.5% of Incap. To me it seems that Incap is starting to be a very hot stock in Finland after the share price climbed from around 4 cents to 17 cents, where it is currently trading. After such a hike I think that the market is not valuing Inission correctly.

Overview of Inission

Inission provides industrial electronic product development and distribution services. They offer a range of solutions spanning the entire product life cycle including design, procurement, manufacturing, testing, warehousing, order management, distribution, and after market support, as well as online service and support.


Like earlier mentioned, Incap is a big part of Inission so a quick look at Incap is in place.

Incap is an Electronics Manufacturing Services (EMS) company. Currently Incap is trading around 37-38 million euros.

In Q3 Incap reported 21.2 million euros of revenue for the 9 months of 2015 ending in September. During that period they also made an EBIT of 2.5 million euros and 1.2 million euros of profit. Incap is expecting to make 25-30 million euros in revenue and an EBIT of 2.9-3.5 million euros in 2015.

To me Incap’s price seems quite correct although they do need to keep their growth going for the valuation to be justified. Therefore, at the moment, I think bigger profits could be gained from Inission.

Rest of the Inission

Now to the main idea. Currently the share is trading at around 220 MSEK. Incap’s portion of this is approximately 145 MSEK so excluding Incap leaves around 75 million kronor for rest of the company.

After first three quarters profit is at 11.8 MSEK, excluding Incap. It should be noted that in Q3 the factories were closed for 4 weeks due to summer holidays. Also, one of the customers, Polltech Information Systems, went bankrupt and losses from that were 1.7 MSEK. If I understood correctly, these losses were already registered for Q3.

Trailing twelve months P/E for Inission, excluding Incap, is between 5 to 6. Based on the TTM P/E I believe that Inission’s market cap should be 120-220 MSEK higher.


I see at least 50% discount in Inission’s share price. As a catalyst for this I see that when knowledge among investors grows the share price will go higher. In my mind this could happen after the annual report. Also, simply growing at good rate will get some attention.

Of course there are some risks that would cancel out the discount. One of the risks is that either of the aforementioned companies cannot meet with their expectations for 2015. This is especially the case with Incap as I haven’t seen Inission’s executives making any predictions of their performance for 2015. There could also be more bankrupts in the clientele that could amount to significant losses for either company.

A Swedish investor has analysed Inission’s intrinsic price to be around 280 SEK based on the 2015 forecast.

I decided to jump the gun a bit and bought 100 shares at 181 SEK before having analysed other interesting companies. This year I will still receive rent for the land that I own and some tax refund so I am still looking to add another company in my portfolio in the coming months. Google Finance doesn’t seem to find this Inission’s ticker at the moment so I can’t live track it in my portfolio.


Disclaimer: Swedish isn’t my native language and since Inission is currently only reporting in Swedish the analysis might contain some errors. Anyone who is considering to take a position should do their own due diligence. Also, liquidity seems to be really low so the share price could take a serious hit if any of the bigger investors want to sell their shares.


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