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Chargeurs

CR
Bloomberg   CRI FP
Support Services  /  France  Web Site   |   Investors Relation
Strong 2025 ambitions, luxury flavour
Target
Upside 76.4%
Price (€) 15.7
Market Cap (€M) 391
Perf. 1W: 1.55%
Perf. 1M: 11.7%
Perf. 3M: 20.9%
Perf Ytd: 11.5%
10 day relative perf. to stoxx600: 1.35%
20 day relative perf. to stoxx600: 0.56%
Strategic Plan19/12/2022

From an industrialist to a luxury player?

The organisation of Chargeurs’ businesses into two strategic operating divisions in July 2022, far from being merely symbolic reflects a strategic shift, in which the company is striving to be more of a luxury player in addition to its supreme competency in niche industries. Ahead of a yet-to-happen significant acquisition, Chargeurs’ management creates optionality value that we see positively as per the strong track record to date. Chargeurs moves fast with a clear drive to extract value where it can.


Fact

  • Chargeurs has communicated its strategic ambition to ‘premiumize its businesses’
  • For the record, Chargeurs acquired the British luxury brand Swaine in 2021.
  • In July 2022, Chargeurs acquired an 80% stake in Skira, a renowned publisher of classical and modern art, and design books.
  • In August 2022, Chargeurs acquired the Cambridge Satchel Company, a company producing luxury leather goods at affordable prices.
  • In September 2022, Chargeurs Luxury Fibers signed a long-term, renewable four-year partnership to supply its responsible wool (Nativa) to Gucci.

Analysis

A change of tack to be expected

After more than 7 years at the helm of the group, Michaël Fribourg has lately been advertising a strategic pivot at Chargeurs: the group is now looking to be more of a luxury player than an industrialist. This shift has already been flagged through the presentation of the group’s divisions as two operating entities, technology and luxury, that took place in July 2022. In the past few years, the group has not only renamed its businesses, it has also expanded its business portfolio and evolved its offering. For example, at Chargeurs PCC (technical components to the textile industries), as the end of formal wear became apparent, changing macro-trends increased demand for athleisure, digital native brands and the luxury market, enabling the division to redefine its offering. The same is true of Chargeurs Advanced Materials, which has moved from simple protective films to more sophisticated products and high-end solutions associated with the environmental transition. The division is now positioned in higher value-added surface solutions.

A rapidly forming luxury division

Let’s move on to what interests us most, a soon-to-materialize substantial luxury division. Over the last few years, the luxury division has been a work in progress aggregating unconventional offerings. The best example is Chargeurs Museum Solutions (CMS), which has grown from a very small segment to one that is expected to generate €200m in revenue by 2025. Through multiple acquisitions, Chargeurs has developed a leading and unique one-stop-shop offering in a very fragmented market of multiple small players. Another intriguing example is the development of Chargeurs Luxury Fibers which, through its Nativa label, has capitalized on the trend towards stricter ESG standards. In September, the division signed a strategic partnership with Gucci to supply its responsible wool. Lastly, the acquisitions of Swaine (UK, luxury leather) in 2021 and the Cambridge Satchel Company in August 2022 are more conventional evidence of the luxury shift on which Chargeurs plans to embark.

Next step?

Chargeurs has effectively made it clear that its next step is a quantum leap into Luxury or something close. We conclude that this about-face may come in the next few years. Since 2015, Chargeurs, with Michaël Fribourg at its head, has already made five acquisitions in its technology division and 10 in its luxury division, but the group is now thinking big. Chargeurs has its sights set on larger acquisitions that would recategorize it as a luxury player. As the group has no specific constraints from its leading shareholder, Columbus Holding, an acquisition of a target with above €150m in sales, entirely debt financed starting from existing drawing rights could ‘overnight’ help build a NAV with a clear luxury tilt. As stated in Chargeurs’ communication back in July 2022, such a move would help to achieve balanced contributions in terms of ROP from the Technologies and Luxury Activities by 2025. This acquisition is unlikely to change the breakdown of sales as a ball park measure of additional luxury sales, according to our calculation. In essence, Chargeurs is letting the market know that it is on the verge of a radical strategic shift, from a holding company and support services to a luxury player, with a pool of management talent to back a fairly rapid pivot. Why not.


Updates

10 Nov 22 Earnings/sales releases
Q3 22: a subdued quarter

15 Sep 22 Other news/comments
The up-and-coming luxury player

12 Sep 22 Earnings/sales releases
H1 22: an encouraging start to FY 2022 demon...

13 May 22 Earnings/sales releases
Upbeat start to 2022 propelled by strong growth...

18 Feb 22 Earnings/sales releases
FY21: CPF achieves record year, group’s finan...

11 Nov 21 Earnings/sales releases
Q3 performance confirms our FY view

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