Tecnotree - Möjligheter och hot

Tecnotree has generated a lot of discussion among Finnish retail investors, so I created a dedicated thread for this. :slight_smile:

Tecnotree är verksamt inom IT-sektorn. Bolaget är specialiserat inom utveckling av digitala kommunikationslösningar. Tjänsterna används huvudsakligen bland bolagets små- och medelstora företagskunder och innefattar exempelvis affärsanalys, marknadsföring, samt utveckling av digitala marknadsplatser. Verksamhet innehas på global nivå, med störst närvaro runtom den nordiska marknaden.

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En ny analys har också kommit, fantastiskt! :slight_smile:

Tecnotree’s Q2 report came in below our estimate for net sales, but above for earnings. The company reiterated its guidance, but the uncertain operating environment is reflected in the company’s order flow as customers postpone their investments to some extent. In the coming years, a critical part of Tecnotree’s investment story will be how the company allocates the capital raised through convertible bonds, which it intends to allocate to M&A and product development, among other things. The risks of the stock are high, but at the current valuation the risk/reward ratio turns marginally positive in our view.

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Greetings everyone! Thank you @börsen84 for creating the thread. I follow Tecnotree as an analyst and I’m happy to help if you have any questions regarding the company. Here is a link to our extensive report from last year: Tecnotree: Fruit of the money tree yet to be harvested

Tecnotree is a global IT solutions provider focused on serving telecom operators. The company offers its customers cloudbased BSS systems that enable them to manage their products, customers, invoicing and digitalize their business.

Tecnotree has a colorful history since the company was under significant distress from ca. 2015-2018. The company went through a restructuring phase. Eventually the company managed well in its turnaround under the current CEO Padma Ravichander and managed to turn itself to strong growth and improve its profitability.

However, the return to growth has again highlighted some structural weaknesses in the company’s business model and geographical positioning. Due to the strong commitment of working capital, the company’s cash flow has been well below the strong earnings level reported in recent years. Currently Tecnotree is trying to expand into developed countries as well to mitigate risks related to operating in developing countries. For this reason as well as due to investments to R&D the company collected 43 MEUR from debentures this year.

Additionally, it’s important to note that Tecnotree invests currently heavily in R&D and activates these costs in its balance sheet. While the depreciation levels are much lower than the R&D investments this gives somewhat too good picture of the profitability.

In the longer term, we believe the growth outlook for Tecnotree is good (although there is some cyclicality in telecom operators investments), underpinned by telecom operators’ operational model shifts and the cloud transformation of BSS solutions. Expanding into new industry verticals also offers new growth opportunities while diversifying the company’s revenue streams.

Here are few graphs you might find interesting:

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I think this is not a very significant news, but on the other hand, good news is always good news.