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 Advanced Materials 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 and sales growth of 2.5% in line with industry expectations. We therefore estimate an EBITDA margin of between 7% and 9% until 2033. In terms of capex, we expect Chargeurs to remain below 3%.
For the NAV, we have stopped using the 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.
