The peer-based valuations are obviously dominated by Hermès. Odiot is not actively restraining its sales as Hermès proudly does, but there is a scarcity when it comes to buying its products. The next two years will tell whether the firm is more volume based, which would warrant more mundane peers.
The DCF is driven by the expected fast paced growth in the next 3 years, with the longer term growth in the out-years something of a stab in the dark. We have used the ultraluxury market’s long-term growth seen at 12%/y.
Our NAV computations is a brave attempt to go granular using the Odiot provided segment sales. EV/Sales inevitably are applied in a rather arbitrary fashion .
Another more industrial approach would be to assign a replacement value to the 3 400-odd molds and matrices. Buying them anew would set back a new entrant by c. €35-40M. In addition, the value of the Odiot brand could be added … The point is that NAV based valuation can easily push into the €30-50M territory for trade buyers. For now, we keep the valuation by sales segment of between €12M and €15M for the equity.
At the margin, and depending on how well self-funded Odiot becomes, and thus how large its inventory of precious metal becomes, some investors may view it as a play on silver prices. For now this is a tall order. Note that, over the last 10 years, silver and gold have delivered broadly similar returns, as silver has suddenly accelerated on industrial demand.
