 Good day, fellow investors. I'm looking through a lot of companies now. I'm building a platform, database of companies, so that I know what to buy when the opportunities arise, when the market falls. One of those companies to watch already now, because it's a very interesting company, is Nokia. I know people don't like Nokia. If we look at what happened in the last 30 years, we can see that it did very well twice, but since 2007, stock really hasn't done any good for the shareholders, perhaps just for those who bought in 2012. However, Nokia has changed as a company. Perhaps things are changing and Nokia can become, again, a very interesting stock to own. Perhaps we won't see the spikes that have been there 20 and 10 years ago, but we could see very nice stable returns, as Nokia is a key player in the 5G technology, which will take over the internet of things in the future, somewhere in the future. Don't know when, but it is likely that it will be a very important player in the future. So if you want to invest in the future, but you want a stable company at a normal price, Nokia might be the company for you. We'll dig into the fundamentals, intrinsic value, see what are the risks a little bit, and see what are the catalysts that might do well for Nokia as an investment, as a long-term investment. Now, what's left of Nokia after so many years is a company that is in the business of broadband, internet, wireless, IP, its technologies, so really into technologies of transferring data around the world, creating the wireless 4G. Mostly sales come from 4G now, 4G servicing. So whatever you use, when you call with your mobile phone, when you watch YouTube videos, my YouTube videos, of course, on your mobile, Nokia might have a part in that what's going on. So when we shift to needing even more data, autonomous driving, healthcare, whatever, which there is a high likelihood that we will love to have faster things, something where we can store all the data we can, then Nokia, with its business, with its technology comes as a perfect fit for what will happen in the next decade. Here is an overview of what Nokia is doing. Most of the revenues come from the network business, then there is the licensing from Nokia technologies, some other from some health items, but that's not that significant now. If we look at the operating profits, there is, of course, network business that's positive. Nokia technologies also good, the group not yet profitable, but it might turn in the future. What's very interesting about Nokia is that it is investing 900 million per quarter in research and development. So a company that invests so much in research and development is bound to reap the benefits of that somewhere in the future. Usually companies, especially in this market, are not investing in research and development because they prefer to invest in buybacks and similar things. Nokia is doing both, but we see a lot of investments in research and development. Those are bound, if Nokia is right, to lead to high profitability in the future. Where are they investing mostly in the 5G? Nokia just made an end-to-end call using 5G new radio, so the commercial version of 5G, which according to Nokia, is paving the way for commercial launches in 2019 already. What is Nokia offering? It's air-scale solution, so really a complete service to whatever the 5G necessities are and will be in the future. So Nokia is one of the few companies that can really develop the full product with, hopefully, and some say, the best quality of the 5G technology in the marketplace now. According to some information, Ericsson is missing some critical components in their product line, while ZTO is basically coping Huawei's technology thanks to government protection. So the competition is there, Ericsson, Huawei, but Nokia has a big share of the 4G investment market and they hope to have an even bigger share of the 5G market. The CEO of Nokia says that 5G implementation requires a coordinated, holistic approach across all elements. Addressing individual parts of the network in isolation will simply not work, and this is also the advantage Nokia has, because it can provide the whole package. If we look at what will lead 5G and why it will be interesting, autonomous driving, augmented reality, virtual reality, etc., and everything else will be going much, much faster. So there is practically a need and a will for 5G. Morgan Stanley, however, expects to see a slow run up with 5G spending, starting slowly in the next three years, and then rising up to a cumulative spend of 250-225 billion. So Nokia will try to get a share of that. Probably the spend will be even higher, because when everything is connected on 5G, this is, let's say, a lowball estimate. Cisco estimates that the Internet of Things will lead to a 19 trillion market. Compare it to GDPs of a lot of countries and you will see that 19 trillion is really a lot. So if that happens, if the Internet of Things becomes such a big market, then technology providers will do extremely well, because they have to service and they have to enable those businesses. Nokia is positioning itself now to take advantage of that. Let's take a look at what's Nokia's guidance from the short term. The best way to invest in the long term for potential long term benefits is to see, okay, even if I invest in the short term, I'm happy with what I own. If there is potentially the higher bonus, perfect, even better. Expected earnings for 2018 are between 0.23 and 27, let's say a price to earnings ratio of 20. However, they expect as 5G sales ramp up earnings in the range of 0.37, 0.42, thanks to the following. Improved 5G sales, targeted growth opportunities in closely related markets, software business, research and development productivity, cutting on costs. Nokia technologies is also expected to add further to the revenue and profitability. If we look further on the 5G technology, we can see that Verizon is already promoting it like it will be the first one who takes court in 5G. However, if we listen to T-Mobile, then they say that the Verizon 5G talk is just marketing and they have no quality because 5G is partnering with Nokia and they commit to full nationwide US 5G mobile rollout by 2020. As they are partnering with Nokia, Nokia should benefit from the spend and if Verizon doesn't manage to hit what they are marketing, they will need Nokia to reach and compete with T-Mobile. So if there is a competition already, we can see higher, higher revenues for Nokia in 2019 as they will need to get market share to be first on the market to have 5G as fast as possible. So let's see the valuation intrinsic value I have put here in this short model. The earnings per share, what will happen from 2020 if Nokia hits the lower end of the guidance and then grows 5% just in the next 10 years earnings per share, they will be growing their dividend so they are already paying a dividend and they have the money to keep paying it also in 2018 even if they expect some weaknesses. I have used a 10% discount rate on future cash flows from earnings present value with an end value of 5.20 which is a price to earnings value of 10 in 2027. I get to a sum of present values of 4.53. This is why I say Nokia is stock to watch, the current price is 4.63 so it's a little bit overvalued from this perspective. However, you never know what will happen in 2018 if there is negative news, if there are bad earnings, short term estimate misses, you might find the stock much lower which would then make it a buy with a margin of safety. Just a quick look at fundamentals, equity per share 2.89, total value financial assets is 17 billion, total financial liability is 8 billion so there is a lot of financial assets in the company 1.61 in financial assets which gives some margin of safety and gives the potential to Nokia to pay its dividend and re-purchase shares. Total interest bearing liabilities are 3.8 billion which is just 23% of equity, this should not be an issue in any kind of environment for Nokia. So we have a company that is positioning itself for the future, investing a lot in research and development is profitable already now, pays a dividend, price to book value is 1.6 so there is no really margin of safety that you would say okay it's a screaming buy, its value is screaming at you but when you look at the risk reward, the reward being unknown because we don't yet know what will this 5G be in the future and how it will change because there is a high likelihood that it will change the world and you want a cheap stock to be exposed to that Nokia might be the stock for you. I will put it on my watch list, we will be discussing it following the news, following the earnings so we'll see how that evolves, if it becomes much cheaper with a margin of safety I'll think I'll be happy to buy Nokia in 2018. What are the risks for Nokia? Am I missing something? Please point it out in the comments looking forward to hear an opposite idea, an opposite view. See you in the next video.