Illar Kaasik | Forecast of TOP101 for 2021 - who are the biggest gainers and losers and how Covid-19 is affecting it all

The second wave of Covid-19 is making its way around the world, and a large part of the world's population is watching the news and reorganising their daily lives accordingly. What could be the impact of the health crisis and the accompanying change in the economic climate on the values of Estonia's TOP 101 companies in the next ranking, which will be published in autumn 2021? The valuation methodology of Estonia’s TOP101 most valuable companies is based on the companies' financial results for the previous three years and the sector specific EV / EBITDA and EV / Sales multipliers of European listed companies as of 30 June of the current year.

There are various factors influencing changes in a company's value: competition, rapid innovation of business models following the Fourth Industrial Revolution, the Paris Climate Agreement, climate change, world population growth, depletion of natural resources, etc. Therefore, there are many variables that interact with different economic processes. But what could be the impact of Covid on the TOP101 of 2021? My prediction is as follows:

Losers: Tallink, Viru Keemia Grupp, Tallinna Airport, Eften Kinnisvarafond II

Gainers: Ericsson, Cleveron, RMK


It is not difficult to assess the impact of Covid-19 - various restrictions on the movement of passengers and the decrease in the number of foreign tourists have significantly reduced the company's revenues. For example, the number of Tallink passengers decreased by 56% in the third quarter of 2020 compared to the same period last year, from almost 3 million passengers to 1.3 million. Even though stock markets responded with growth to the news received at the time of writing this article that the coronavirus vaccine co-developed by Pfizer and BioNTech has been 90 percent effective in preventing infection in ongoing phase three trials, the crisis cannot be said to be over for the tourism industry. The implementation of the vaccine and the change in consumer behaviour will take time, and thus the economic results of companies in this field will remain under pressure next year as well.

Tallinn Airport

The impact of Covid is clearly visible when we visit the attractive and modern, but half-empty building of Tallinn Airport. According to the information portal Teatmik, the company's turnover in the first three quarters of 2019 was in the order of EUR 27.5 million; The turnover of the three quarters of 2020 was 17.5 million EUR i.e. 37% lower. In September, 45,225 passengers passed through Tallinn Airport, which accounted for only 15% of the number of passengers in September of the previous year. At the moment, similarly to Tallink, there is no indication of a rapid recovery of revenue for the airport, and thus in 2021 the value of the company will still be affected by Covid's direct impact on the current financial result as well as the aviation sector and its multipliers as a whole.

Eften Kinnisvarafond II

The commercial real estate sector as a whole has not yet suffered from Covid's influence at the moment, on the contrary, money is cheap on the market and, with the exception of the hotel sector, there are currently no major vacancies in real estate. In the third quarter of this year, the number of foreign tourists visiting Estonia was only a third compared to a year ago. Eesti Pank announced that foreign tourists spent 145 million euros in Estonia, which is 330 million euros less than a year ago. Covid will certainly have an impact on the office building sector and retail linked commercial real estate revenues, but certainly many times less than it has had on the hotel and catering sectors. The assets of Eften Kinnisvarafond II include the Radisson building on Rävala street in Tallinn, the value of which amongst the fund's assets was 46.2 million EUR in 2019, accounting for approximately 32% of the total assets and 26% of the fund's operating profit. The total operating profit of the fund in 2019 was 14 million EUR and Radisson's share of it was 3.7 million EUR. Recently, the fund announced that the hotel will be undergoing repairs for 12-14 months. From this we can conclude that the value of the fund as a company will decrease significantly in 2021, as the hotel will be under renovation and not generating income. Depending on the length of the Corona crisis and the impact of national restrictions on the solvency and sustainability of companies renting office and retail space owned by the fund, further bad news may be added.

Viru Keemia Grupp

The company's financial performance depends significantly on the market price of oil and CO2 allowances and the Paris Agreement. Eesti Energia has announced the launch of a green revolution, acquiring the renewable energy producer Nelja Energia in 2018 and is planning an Enefit Green IPO to continue investments in the renewable energy sector. Viru Keemia Grupp has not yet expressed to the public a clear vision for the future. The company has been able to make good money in the last two years and has the capital to make new investments, and at the same time, the government is launching a flexible transition program that will make it easier to raise capital for new projects in Ida-Viru County. The company actively participated in the development of the shale oil refinery project in cooperation with Eesti Energia, but in the summer of 2020 Eesti Energia and Viru Keemia Grupp announced that they had concluded the shale oil pre-refinery construction process, as Estonian oil had become more valuable following the entry into force of the Sulphur Directive and the added value created by the construction of the plant would be lower than forecast.  At the same time, the company has also been active in the field of earth exploration, promoting the idea of phosphorite mining. Since the company has the competence of the chemical industry and a developed heavy industry infrastructure, it makes sense to assume that future plans will be made in this direction.

At the same time, looking ahead to 2021, a decrease in the value of the company can be predicted, as the rapid growth of oil prices cannot be expected at the moment and due to European climate policy, it is no longer desirable to invest in the sector in which the company operates. According to Teatmik, the company has also lost about 20% of its turnover in 2020, which may be due to the fact that the shipping sector, which is a major buyer of shale oil, was in crisis in the second quarter of 2020 due to Covid.



A successful company that develops parcel machines for the growing e-commerce. In 2019, the company's turnover was 66 million EUR and operating profit 13.2 million EUR. These results elevated the business to 75th place in the TOP101 list. In 2020, however, the company's sales revenue will be almost 400% lower than in the previous year, and one might assume that Cleveron will not be seen in the TOP of 2021. What is the reason for this? The area on which Cleveron is counting on, i.e. e-commerce and retail of goods, continues to grow. Unfortunately, several large customers withdrew their contracts as, due to the impact of Covid, the development projects were either temporarily suspended or could not be realised. Due to movement restrictions, the customer's representatives could not come to the factory and the manufacturer could not send their staff to assemble the equipment. Cleveron reacted quickly to the change in the situation and in the third quarter began to use augmented reality in the assembly of equipment, which allows to control the assembly process remotely. Covid is influencing the development of e-commerce by accelerating it, so it can be expected that the temporary difficulties will soon turn into a victory for Cleveron. The results of the company in the TOP of 2021 will not yet reflect this, but in 2022 one can expect rapid growth.


Ericsson operates in the economic sector of the future. In its annual report, the management writes: “No previous mobile technology has had the economic growth potential of 5G. This technology goes beyond simply connecting people; this technology makes the advent of the Internet of Things and Industry 4.0 possible, 5G is the basis for these changes. Smart cities, the industrial Internet of Things, virtual reality, self-driving cars - these are just a few examples of what could be our new reality as 5G becomes part of our ecosystem. The volume of data communications through mobile networks is still growing very fast: from the fourth quarter of 2018 to the end of 2019, the volume of data communications increased by 49%. The number of mobile network users continues to grow - in 2019, the number of users in the world increased to 6.3 billion (5.9 billion in 2018). " According to forecasts by Ericsson, the volume of mobile data communications will increase up to 4 times in the next six years compared to 2019. There is no doubt that the company operates in an area that is growing rapidly and in which Ericsson has a historically strong market position. Add to this the opposition to the use of Huawei's technologies in America and Europe arising from the US-China economic war, and it can be assumed that the company's financial results will grow rapidly in the coming years.


It may come as a surprise that Covid-19 has affected the timber sector. Timber prices have been growing in the second half of 2020, despite the rapid cutting of old German spruce trees in Central Europe due to bark beetles plundering spruce forests. Due to this, the supply of spruce wood was higher than the average in 2019-2020, leading to a decrease in spruce log prices. In the initial phase of Covid, global timber production was reduced in the fear that demand would fall. Global trade was also somewhat disrupted by the virus. At the same time, a situation suddenly arose where a consumer who had planned to spend money on travel began to spend it locally. Sales of leisure and hobby goods grew exponentially with more bicycles and camping cars being sold. But people also started to renovate their real estate and searched for homes outside the city and started to fix them up with the desire to get out of the city. This led to an increase in timber prices and thus to buying pressure on the shares of companies operating in the timber sector. The sector multiplier almost doubled, which also led to an increase in the value of RMK in the TOP101 list. In the third quarter of 2020, the same trend can be seen to continue, which is why the value of companies in the timber sector can be expected to increase in the TOP of 2021 as well.

Mister X – the surprise 

Covid-19 has brought about a huge change in the world. Back in 2019, the tourism sector was growing, by 2020 the whole sector is in a great crisis. But where there are losers, there are also always winners. There will probably be companies in the TOP of 2021 that have unexpectedly won from the arrival of a medical crisis. We will find out who the surprise Mister X in the Estonian business landscape is in the near future. But I would like to suggest a hypothesis - perhaps Mister X will come from the field of e-commerce. This year's 3rd quarter was surprisingly stable in e-commerce in Estonia. In August, 736,500 parcels moved through Estonian parcel machines, which was 51% higher than a year ago. In September, however, 856,000 parcels moved through parcel machines, which is an increase of 67%. The increase in the number of packages in the third quarter is also confirmed by the growth of the turnover of Maksekeskus (approximately half of the turnover of the Estonian e-commerce market) in the same magnitude - 60% in August and 53% in September, respectively. Over the quarter, the growth of e-commerce in Estonia compared to the same period last year can be estimated at about 60%.

Illar Kaasik, Partner at Prudentia Estonia

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