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
Holding Companies  /  France  Web Site   |   Investors Relation
2025 objectives raise organic growth ambitions
Target
Upside 31.6%
Price (€) 26.42
Market Cap (€M) 643
Benchmarks Current multiplesWeightValues (€)Upside 
NAV/SOTP per share   55%38.947%
Dividend Yield Peers 2.4% 20%28.79%
DCF (Edit and simulate)  10%37.743%
P/E Peers 20.1 x 10%30.114%
P/Book Peers 2.5 x 5%17.3-34%
Target Price  100%34.832% 
Valuation matters

We regard Chargeurs SA as an industrial conglomerate with a holding company profile as its activities are clearly independent and do not complement each other beyond sharing common central costs and resources. It is for the parent holding company to make sure that the world reach of its subsidiaries is better shared on an ad hoc basis. Recent experience has shown that these industrial businesses, while unrelated, tend to move in synch in rapidly-deteriorating market conditions. There is little prospect of mutually offsetting business cycles in the current spread of assets.

Peer metrics are therefore mostly found within the holding company sector plus the odd reference to specialist chemicals as Protective Films are the historically dominant business (overtaken momentarily by CHS in Covid-19-hit 2020) contributing a 5-year average of 46% of group sales and 58% of EBITDA. We used to apply a discount to the peer-based reference P/E to account for the fact that Chargeurs’ businesses are primarily B2B operations but the strong top-line growth combined with considerable agility no longer warrants this.

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 (17.7%).

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 c.52% of the 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 fourth year in a row. The “evergreen” tax loss carry forwards stand at €289m for the group of which the bulk (€161m) in France.

Comparison Based Valuation
Computed on 18 month forecastsMcap (€M]P/E (x)P/Book (x)Yield(%)
Peers ratios 22.9 1.50 2.45
Chargeurs's ratios 20.1 2.52 2.40
Premium 0.00% 10.0% 10.0%
Default comparison based valuation (€) 30.1 17.3 28.7
AkzoNobel 17,680 24.73.622.12
GBL 15,445 21.90.733.05
Bolloré 15,202 26.01.461.16
Hal Trust 12,243 42.41.693.75
Solvay 10,778 30.41.892.75
Wacker Chemie 7,561 16.23.621.97
Ackermans & van Haaren 4,918 12.31.311.66
Sonae 1,672 7.720.765.56
DCF Valuation Per Share Help View DCF history
WACC % 7.77
PV of cashflow FY1-FY11 €M 447
FY11CF €M 80.9
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.65
Terminal value €M 1,322
PV terminal value €M 625
PV terminal value in % of total... % 58.3
Total PV €M 1,072
Avg net debt (cash) at book v... €M 199
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 887
Number of shares Mio 23.5
Implied equity value per share 37.7
Sustainability impact on DCF % -4.10
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 0.87
Debt beta x 0.56
Market capitalisation €M 616
Net debt (cash) at book value €M 207
Net debt (cash) at market value €M 179
Company debt spread bp 280
Marginal Company cost of debt % 6.30
Company beta (leveraged) x 1.05
Company gearing at market v... % 33.6
Company market gearing % 25.2
Required return on geared eq... % 8.74
Cost of debt % 4.41
Cost of ungeared equity % 7.86
WACC % 7.77
DCF Calculation Help
  12/20A 12/21E 12/22E 12/23E Growth 12/24E
Sales €M   822 705 769 839 3.00% 864   
EBITDA €M   102 73.1 82.5 96.0 3.00% 98.9   
EBITDA Margin %   12.5 10.4 10.7 11.4 11.4   
Change in WCR €M   2.60 1.39 -0.11 -0.64 2.50% -0.66   
Total operating cash flows (pre tax) €M   88.3 66.5 74.4 87.3 98.2   
Corporate tax €M   -4.30 -4.34 -7.44 -10.3 2.50% -10.5   
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 -2.34 -2.25 -2.15 -2.17   
Pre financing costs FCF (for DCF purposes) €M   66.3 42.5 46.4 55.5 65.3   
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 42.5 46.4 55.5 65.3   
Discounted free cash flows €M   66.3 42.5 43.0 47.8 52.1   
Invested capital   377 389 404 419 436   
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 14.5 537 537 22.8 51.5%
Healthcare Soluti... 100% EV/EBITDA 12 268 268 11.4 25.7%
Fashion Technol... 100% EV/EBIT 9 85.1 85.1 3.61 8.16%
Museum Solution... 100% EV/EBITDA 11 82.5 82.5 3.50 7.92%
Luxury Materials ... 100% Adj. historical price 35.0 35.0 1.49 3.36%
Tax loss carryfor... 100% AlphaValue valuation 35.0 35.0 1.49 3.36%
Other
Total gross assets 1,042 44.2 100%
Net cash/(debt) by year end -127 -5.38 -12.2%
Commitments to pay
Commitments received
NAV/SOTP 915 38.9 87.8%
Number of shares net of treasury shares - year end (Mio) 23.5
NAV/SOTP per share (€) 38.9
Current discount to NAV/SOTP (%) 32.0 View history

Changes to Story : 13/09/2021, Changes to Forecasts : 13/09/2021.