AlphaValue Corporate Services Fundamental Analysis FR
Back to
AlphaValue Corporate Services
This research has been commissioned and paid for by the company and is deemed to constitute an acceptable minor non-monetary benefit as defined in MiFID II

Chargeurs

CR
Bloomberg   CRI FP
Holding Companies  /  France  Web Site   |   Investors Relation
Now pursuing organic growth ambitions
Other news/comments20/07/2016

Chargeurs goes for acquired growth, at last

Fact

Chargeurs makes a smallish but significant acquisition. Main Tape, the business acquired in the US with revenues of c. $27m, is an add-on to Protective Films, the main business line of Chargeurs SA. The consideration is unknown. We tinker with sideline indications to gauge an impact (see last section).


Analysis

Chargeurs SA has a new governance, a new owner and is insistent on the concept of quality growth (read “profitable”) in niche businesses. Where it differs from smaller holding companies is that it already has a world reach so that the concept of tackling niche businesses has substance. The Main Tape acquisition is small in turnover terms but does highlight the new growth-oriented drive of Chargeurs as it is its first acquisition in the last 15 years or so.

Chargeurs’ management is keen to stress that it is going for growth “à la Mittelstand” if one dares write so. This implies believing in decentralised management, a strong balance sheet, financial discipline and profits rather than size. The starting point can only be to expand where Chargeurs already excels, i.e. its four existing businesses

The Main Tape acquisition appears to fit the bill in that it brings extra know-how to Chargeurs Protective Film, more US-based operations so that the group ends up with nearly 20% of its sales in the US (good to have), extra industrial capacity so that it saves on capex, complementary products so that sales forces will have more on their plate and apparently solid management. There is no price information but the acquisition which is debt free and debt financed is expected to be earnings enhancing after the odd 18 months.

The stated strategy is to go for such “surgical” additions to the existing businesses. The group has the proper financing lined up with a €57m funding raised earlier this year as a private placement at rather agreeable terms so that more may follow and confirms the group’s change in profile from a retrenchment one to one of finely-tuned expansion.


Impact

We assume that Chargeurs which initiated discussions went for a “trade” deal, i.e. 20% to 25% below the going rate of EV at c. 1x sales. This would mean a debt-financed transaction at c.€18m, generating operating earnings of about €2.4m, leading to a post-tax €1.6m result. That would more than cover the funding costs of the purchase that we compute at 4% and thus a €0.7m interest charge. In addition, Chargeurs reckons that the synergies derived from the joint businesses could be as high as €2m. Once taxed that would add €1.3m at the bottom line so that this acquisitions, which kicks in by July 2016, would add close to €2m to the bottom line by 2018 or about 6% earnings enhancement. Such back of the envelope computations are not backed by the company and will be allowed for when H1 earnings lead to an update.


Target
Upside 49.8%
Price (€) 19.04
Market Cap (€M) 460
Perf. 1W: 8.67%
Perf. 1M: 34.7%
Perf. 3M: 35.5%
Perf Ytd: 13.1%
10 day relative perf. to stoxx600: 24.9%
20 day relative perf. to stoxx600: 33.0%
Updates

20 Jul 16 Other news/comments
Chargeurs goes for acquired growth, at last

15 Mar 16 Earnings/sales releases
Strong 2015 earnings and refreshing growth tone

28 Jan 16 Earnings/sales releases
Confirmed robust 2015 sales

12 Nov 15 Earnings/sales releases
Q3 sales growth where it matters: protective films

08 Oct 15 ESG related
Change of control

08 Sep 15 ESG related
Voting rights reaffirmed

02 Sep 15 Earnings/sales releases
An unexpected growth message wrapped in a s...

.