BUY NOKIA – Update +10% – Turnaround underway however we are booking half of our position

We are now starting to see the turnaround taking effect as the company announced results beating on both top and bottom line

The company is now showing strong improvement in both cash generation – and more importantly on the much needed cost cutting, they are well on track for the three phased turnaround plan that will accelerate in 2022 and mid term

Management focus on margins, costs reduction and growth finally bearing fruit. It’s been a while coming following late 2019 company earnings & forecast cuts, these results finally show the market that the days of disappointment are over as the turnaround commences.

5G is one of the largest infrastructure projects ever  with Europe investing EUR 500bn+, China USD 400bn by 2023 the US just below USD 300bn over the next 7 years. Nokia after years of disappointment are putting themselves back in the frame to be a world leader.

Our short/medium term valuation shows an additional +10% upside from here while our blue sky still see +80% potential

Having said all that we happy to book profits of 10% on half our position as it has been a long time coming and we will look to re enter on any new catalysts or pullbacks.

Reiterate BUY NOKIA FH – Update +4% – Results out – Our blue sky upside remains +100%, short/medium-term upside +25%

Thursday • 04 February 2021 • 13:45

*Strong results, driven by higher demand in North America but expects sales in 2021 to be on the lighter side of analyst estimates

*Also beating on the earnings which come in around 15% better than analyst estimates

*New CEO says still sees 5G competitiveness improving and will do whatever it takes to stop losing market share – and to cut costs

*No dividend proposed as the company is reinvesting to growth its 5G assets

*Reddit follower drove the stock +40% at one point in the ADR as retail investors were excited about the 5G and wanted to cause a squeeze in the ‘hated’ name – short interest is around 6-7 days at the moment

*While on a DCF basis the company still looks fairly valued we think the opportunity is within the growth segment as the new management is opening new doors with costs cuts and the huge growth prospects in 5G

*Capital markets day set for 18 March

BUY NOKIA FH – Calling for Growth – Blue Sky upside +100%, short/medium-term upside +25%

Monday • 25 January 2021 • 14:46

*While a bit of a ‘hated’ company with a historic of earnings disappointments we believe the new management will be able to turn the company back into a winner with its 5G focus – competing against Huawei who has been hit with political opposition in its expansion

*5G is one of the largest infrastructure projects ever and is estimated to be crucial earnings component for these companies for the next 5 years  with Europe investing EUR 500bn+, China USD 400bn by 2023 the US just below USD 300bn over the next 7 years

*Greensill report estimates 5g relative technologies will reach USD 2.7 trillion by the end of 2020

*New management team focusing on margins, costs reduction and diversification – Management could also sell part of its profitable segments to focus more on growth and margins – all factors crucial for recovery  

*Reduction in cost base will bring NOKIA a fighting chance against Ericson with its close to 20% market share in 5G and Huawei with cover 40%

*Patent lawsuit against Lenovo could result in royality payments by the end of the year which could add 5% to EBITDA a quarter – Trial set for 3-7

May with a final decision set for 10 December

*While on a DCF basis the company still looks fairly valued we think the opportunity is within the growth segment as the new management is opening new doors

*Speculation has in the past been about potential LBO for the company

*The main issue for the company remains how long it will take for margins to recover under the new management

*ANR current shows 18 Buys, 13 Holds and 2 Sells with an average price target around the current price

*CMD scheduled for 18 March and results set for 4th Feb – both potential catalysts