Rush Factory H2'24: Eyes already on yacht hotels

Automatic translation: Originally published in Finnish on March 25th, 2025 at 7:30 AM EET. Please note that the automatic translation currently only covers the text visible here and may contain errors. You can provide feedback on the translations here.

Rush Factory's H2 was quiet due to the cancellation of several events due to the group's financial challenges, and the company did not start advance sales for the next event season. From an investment case perspective, Rush Factory's own figures are insignificant, as the value of the share relies on the conditional share swap agreement signed with Sunborn International Holding Oy (SBHI). If the share exchange is realized, we expect the share price to decline towards the exchange ratio of approximately EUR 0.15 per share used in the transaction. We reiterate our Sell recommendation, but we do not give a target price for Rush Factory, as the value of the share relies on external factors.

H2's event tour remained exceptionally small

Rush Factory only organized seven smaller events in H2, as the company's weak financial position limited its ability to finance event production. The company completely failed to organize the events scheduled for the end of the season in England, Germany and Austria, which explains the decline in revenue year-on-year. The change in the payment intermediary's sales settlement policy at the German subsidiary, which had weakened cash flow during the summer, finally paralyzed the company, which had been suffering from poor liquidity and had been struggling for a long time. The company’s H2 cost structure was slightly lighter than we expected, but this does not change the overall picture of Rush Factory’s very difficult situation. Typically, Rush Factory's H2 cash flow is supported by advance sales for the upcoming event season due to the capital-light business model of tickets, but this was missing from the figures now. After the review period, Rush Factory announced that it had sold its German subsidiary for a negative purchase price of 25 TEUR. We believe the company has concluded that this solution is the most effective way to liquidate the subsidiary.

Turning the business around on its own would be very challenging in the current situation.
At the end of the review period, Rush Factory's cash reserves were only 5 TEUR and shareholders' equity had decreased to EUR -1.8 MEUR. In addition, the 0.17 MEUR fine imposed by the municipality of Masku for failure to fulfil the construction obligation is still outstanding, although the company is negotiating with the municipality to reduce the fine. Given these circumstances and incorporating the proceeds from the new financing raised from AktiiviOmistajat, Rush Factory's own business would no longer be viable without the planned share swap.

The valuation is imprecise with the current information, but we see downward pressure on the stock towards the exchange ratio pricing

In our view, Rush Factory's share value is based on the conditional share exchange agreement signed in December 2024 with Sunborn International Holding. We view the share swap positively, incorporating the company's extremely challenging situation. We commented on the proposed exchange of shares extensively here. The progress of the share exchange appears to be behind the preliminary schedule announced in February, so investors should actively follow Rush Factory's news feed.

For the conditional share exchange to be approved by Rush Factory's Extraordinary General Meeting, Rush Factory will acquire the entire share capital of SBHI by issuing approximately 562 million new shares to the sellers. In the share exchange, SBHI's theoretical value has been set at EUR 86.1 million, while Rush Factory trades at a high value of EUR 1 MEUR in the deal. The share issue directed at SBHI trades Rush Factory's share at a subscription price of EUR 0.153 per share, which we see pressuring the share price towards if the conditional share exchange is completed.