Tecnotree is a Finnish BSS/OSS software house — billing, charging and digital-platform stacks sold to emerging-market telcos across Africa, the Middle East, Latin America and Asia. LTM revenue is EUR 72.3m at a 35.5% EBIT margin, the balance sheet is net cash (EUR 13.3m), and there is no goodwill: the entire asset base is organically R&D-built. Adjusted ROIC of 11.2% clears the 8% WACC, so the business generates genuine economic profit (EUR 4.59m, +3.2pp spread on EUR 141.4m of invested capital).
The dominant mttssn adjustment is R&D capitalisation: the company capitalised EUR ~9.7m of development while amortising only EUR ~4.3m (a >2x cap-to-amort ratio, net asset build). Reversing that policy is why adjusted ROIC (11.2%) sits below the reported proxy (13.6%) — the true return spread is thinner than the reported numbers suggest, though still positive and value-creating.
Forward demand is strong: the order book reached EUR 105.4m (+50% YoY) on new Africa and LatAm awards, and Q1-2026 revenue held flat (-0.2% reported, +1.0% constant-currency) at a 27.4% quarterly EBIT margin. Structural profitability is intact; the live problem is cash conversion, not the P&L.
At EUR 5.9 the market cap is EUR 134.7m and EV is EUR 121.4m (net cash EUR 13.3m), so EV/EBIT is ~4.7x on LTM EBIT of EUR 25.7m — optically deep value for a 35.5%-margin, net-cash, positive-EP software name. On fundamentals alone that is a wide discount to a value-creator.
But the mark is possibly bid-distorted: a Helios/Resilience all-cash tender offer lapsed 15 Jul 2026, and the compulsory convertible debentures largely converted to 5.78m new shares in Feb 2026 (triggered by the tender's accelerated-conversion right). The 5.9 price may still carry a bid premium that bleeds out to a lower un-bid clearing level — so the EV/EBIT optics overstate the certainty of the margin of safety. We hold the mark under review rather than treating 4.7x as a committable entry.
The market pays today’s enterprise value for roughly -30.2% NOPAT growth over 5 years. The business earns 11% on capital against a 8% cost of capital (spread +3.2 pp); the no-growth value is €10/share (173% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | €8 | -14% | +36% | 25% | Un-bid price holds; MEA collections normalise; order book converts |
| Base | €6 | -29% | +2% | 45% | Cheap value-creator, but bid premium bleeds and mark re-rates to fundamentals |
| Bear | €4 | ≥-50% | -32% | 30% | Bid premium fully unwinds toward an un-bid clearing price while MEA collection stress and DSO drag persist |
| Prob-weighted | €6 | — | +0% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 14 | 15 | 15 | 16 | 17 | 19 |
| 7.25% | 12 | 12 | 13 | 14 | 14 | 16 |
| 8.00% (base) | 10 | 11 | 11 | 12 | 12 | 13 |
| 8.75% | 9 | 10 | 10 | 10 | 10 | 11 |
| 9.50% | 8 | 9 | 9 | 9 | 9 | 9 |
Green = fair value above the current price of €5.90. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Adjusted ROIC 11.2% vs 8% WACC, positive EP EUR 4.59m — a genuine, if thin, value-creator at a cheap multiple.
EUR 105.4m backlog on Africa & LatAm awards signals strong forward demand and revenue visibility.
EUR 13.3m net cash, no leverage — survives a bad collections year without refinancing risk.
35.5% LTM EBIT margin (27.4% in Q1, +50bp) — profitability is not the problem, cash timing is.
EV/EBIT ~4.7x is a wide discount if the un-bid clearing price holds anywhere near the current mark.
Tecnotree is a cheap value-creator — EV/EBIT ~4.7x, adjusted ROIC 11.2% > WACC 8%, positive EP, net cash, order book +50% YoY — but two things cap it. The EUR 5.9 mark is possibly still bid-inflated after the Helios/Resilience tender lapsed on 15 Jul 2026, and Q1 cash conversion cratered on MEA collections (FCF EUR 0.2m). We rate it HOLD, low conviction: the cheapness is genuine, the margin of safety is not certain.
The mark should be re-pulled and re-gated once the bid premium bleeds out; a HOLD becomes a BUY case only if the price clears near-fundamental value and MEA collections normalise (DSO falls, FCF re-converts). Streamlined tier plus a distorted mark plus live collection risk keep conviction at LOW.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| LTM revenue EUR 72.3m (FY 72.4 - Q1'25 16.9 + Q1'26 16.8) | 72.3 | Key figures / Consolidated income statement p.2, p.10 📄 p.2 | LTM flow build off the FY anchor and the Q1 2026 report's 1-3/2025 vs 1-3/2026 columns. |
| LTM EBIT EUR 25.7m (FY 25.6 - 4.5 + 4.6) | 25.7 | Consolidated income statement p.10 📄 p.10 | Reported operating profit is already ex one-off items; one-offs are in financial items below EBIT. |
| Capitalised development additions FY2025 EUR 9.71m | 9.71 | Note 10 Intangible assets — Lisäykset (development costs) | Core mttssn R&D-capitalisation reversal input; company capitalises more development than it amortises. |
| Amortisation of development costs FY2025 EUR 4.26m | 4.26 | Note 5 / Note 10 — Poistot kehittämismenoista -4 261 | Amortisation already in EBIT; added back when reversing the capitalisation policy. |
| No goodwill in group | 0 | Accounting policies — 'Konsernissa ei ole liikearvona kirjattavaa' | No goodwill and no acquired (PPA) intangibles — removes the whole PPA/goodwill leg of the software checklist. |
| Shareholders' equity Q1 2026 EUR 126.0m | 126 | Consolidated balance sheet p.10 📄 p.10 | Post-CCD-conversion equity; IC snapshot taken at Q1 2026 not FY anchor. |
| Translation reserve (accumulated OCI) EUR -26.19m | -26.19 | Statement of changes in equity — Muuntoerot -26 185 | Negative translation reserve stripped from equity for IC (raises equity_ex_oci). |
| Interest-bearing debt Q1 2026 EUR 4.7m (1.7 + 3.0) | 4.7 | Consolidated balance sheet p.10 📄 p.10 | Non-current + current interest-bearing liabilities added to IC financing base. |
| Cash & equivalents Q1 2026 EUR 18.5m | 18.5 | Consolidated balance sheet p.10 📄 p.10 | Excess cash (18.5 - 1.45 operational) removed from IC. |
| Share-based compensation FY2025 EUR 2.69m | 2.69 | Statement of changes in equity — Osakeperusteiset maksut 2 691 | Kept in opex (a real cost), flagged for transparency; not added back. |