AlphaValue Corporate Services Fundamental Analysis FR
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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
Support Services  /  France  Web Site   |   Investors Relation
On solid footing to attain 2025 ambitions
Target
Upside 38.0%
Price (€) 25.28
Market Cap (€M) 616
Benchmarks Current multiplesWeightValues (€)Upside 
DCF (Edit and simulate)  35%37.247%
NAV/SOTP per share   20%38.351%
EV/Ebitda Peers 9.5 x 20%30.520%
P/E Peers 18.9 x 10%25.92%
Dividend Yield Peers 2.6% 10%37.247%
P/Book Peers 2.3 x 5%36.343%
Target Price  100%34.938% 
Valuation matters

We regard Chargeurs SA as an industrial group in the Support Services sector, a highly diversified universe of businesses catering for various B2B services on a low capital intensity basis. We had initiated coverage of Chargeurs as a holding company then battling on to pay back its debt. The strategy pursued by the new owner, with a focus on active management of its industrial assets and leveraging its existing capabilities to develop new capital light businesses, has led us to reassess our view on Chargeurs’ valuation profile.

Peer metrics therefore consist of a multi-sector group of companies with a B2B services dimension; plus the odd reference to specialist chemicals as Protective Films is the historically-dominant business (overtaken momentarily by CHS in COVID-19-hit 2020) with a 5-year average of 46% of group sales and 58% of EBITDA. We apply a discount to the peer-based references to account for Chargeurs’ smaller scale versus peers.

The DCF is based on fairly modest EBITDA growth of 3.0%, in line with industry expectations. We assume that the well managed net debt situation of the group would warrant a tight spread now at 280bp. This reflects the fact that the firm seems determined to keep a substantial financing buffer. We make no allowance for the net present value of the tax assets (see below) beyond what stems from the relatively low tax rate projected in 2022 (19%).

For the NAV, we stopped using data calculated and provided by the company in the parent company’s financial statements. The more entrepreneurial management since late 2015 warrants the use of sector multiples which leads to the Protective Films business accounting for around half of the total gross assets.

Finally, there is the vexing issue of what to do with the huge tax loss carry forwards resulting from the historical losses. The previous view, that they were unlikely to be used up by operations over the next few years and the French tax rule tightening so that the open-ended portion was unlikely ever to materialise, is probably too cautious now that the earnings delivery of the group has been confirmed for the fifth year in a row.

Comparison Based Valuation
Computed on 18 month forecastsMcap (€M]P/E (x)Ev/Ebitda (x)P/Book (x)Yield(%)
Peers ratios 28.9 14.6 4.96 1.32
Chargeurs's ratios 18.9 9.48 2.32 2.58
Premium -33.0% -25.0% -33.0% -33.0%
Default comparison based valuation (€) 25.9 30.5 36.3 37.2
Teleperformance 22,036 26.715.37.000.78
AkzoNobel 17,739 26.014.83.792.15
Rentokil Initial 13,627 39.617.45.960.99
Bureau Veritas 13,034 32.313.86.781.42
Quadient 695 10.24.120.462.49
DCF Valuation Per Share Help View DCF history
WACC % 7.67
PV of cashflow FY1-FY11 €M 435
FY11CF €M 78.4
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.70
Terminal value €M 1,313
PV terminal value €M 627
PV terminal value in % of total... % 59.0
Total PV €M 1,062
Avg net debt (cash) at book v... €M 200
Provisions €M 18.6
Unrecognised actuarial losses... €M 0.00
Financial assets at market price €M 32.3
Minorities interests (fair value) €M 0.00
Equity value €M 876
Number of shares Mio 23.5
Implied equity value per share 37.2
Sustainability impact on DCF % -3.65
Assessing The Cost Of Capital Help
Synthetic default risk free rate % 3.50
Target equity risk premium % 5.00
Tax advantage of debt financ... % 30.0
Average debt maturity Year 5
Sector asset beta x 0.85
Debt beta x 0.56
Market capitalisation €M 589
Net debt (cash) at book value €M 208
Net debt (cash) at market value €M 180
Company debt spread bp 280
Marginal Company cost of debt % 6.30
Company beta (leveraged) x 1.03
Company gearing at market v... % 35.3
Company market gearing % 26.1
Required return on geared eq... % 8.67
Cost of debt % 4.41
Cost of ungeared equity % 7.76
WACC % 7.67
DCF Calculation Help
  12/20A 12/21E 12/22E 12/23E Growth 12/24E
Sales €M   822 707 770 841 3.00% 866   
EBITDA €M   102 71.8 80.7 93.4 3.00% 96.2   
EBITDA Margin %   12.5 10.2 10.5 11.1 11.1   
Change in WCR €M   2.60 1.32 -0.09 -0.65 2.50% -0.66   
Total operating cash flows (pre tax) €M   88.3 65.2 72.6 84.8 95.5   
Corporate tax €M   -4.30 -4.02 -6.97 -9.56 2.50% -9.79   
Net tax shield €M   -2.85 -3.15 -3.30 -3.60 2.50% -3.69   
Capital expenditure €M   -14.9 -16.5 -17.3 -18.0 4.00% -18.7   
Capex/Sales %   -1.81 -2.33 -2.25 -2.14 -2.16   
Pre financing costs FCF (for DCF purposes) €M   66.3 41.5 45.1 53.6 63.3   
Various add backs (incl. R&D, etc.) for DCF... €M   0.00 0.00 0.00 0.00 0.00   
Free cash flow adjusted €M   66.3 41.5 45.1 53.6 63.3   
Discounted free cash flows €M   66.3 41.5 41.8 46.2 50.7   
Invested capital   377 390 404 419 436   
NAV/SOTP Calculation
 % ownedValuation technique Multiple used Valuation at 100%
(€M)
Stake
valuation
(€M)
In currency per share
(€)
% of gross assets
Protective Films 100% EV/EBITDA 14.5 561 561 23.8 54.6%
Healthcare Soluti... 100% EV/EBITDA 12 234 234 9.94 22.8%
Museum Solution... 100% EV/EBITDA 11 89.1 89.1 3.79 8.67%
Fashion Technol... 100% EV/EBIT 9 73.9 73.9 3.14 7.19%
Luxury Materials ... 100% Adj. historical price 35.0 35.0 1.49 3.40%
Tax loss carryfor... 100% AlphaValue valuation 35.0 35.0 1.49 3.40%
Other
Total gross assets 1,028 43.7 100%
Net cash/(debt) by year end -127 -5.38 -12.3%
Commitments to pay
Commitments received
NAV/SOTP 901 38.3 87.7%
Number of shares net of treasury shares - year end (Mio) 23.5
NAV/SOTP per share (€) 38.3
Current discount to NAV/SOTP (%) 34.0 View history

Changes to Story : 26/11/2021, Changes to Forecasts : 26/11/2021.