As talked about in my STEF write-up, US Chilly Storage firm Lineage went public just a few days in the past and was in a position to take action fairly efficiently.

As IPO prospectuses usually comprise some fairly fascinating data, I wished to rapidly look by and extract what I discover fascinating. Particularly on a sizzling day like at present, studying quite a bit about chilly storage is kind of comforting 😉

Valuation

Let’s have a look at the brand new value level we obtained by the IPO. Sadly, Lineage Chilly Storage just isn’t but obtainable in TIKR, so let’s hae a fast have a look at comps “by hand”:

Bloomberg provides us a Market cap of 19,2 bn USD primarily based on 220 mn shares excellent. Complete income in 2023 was 5,3 bn (thereof 3,9 bn warehousing). Internet debt is 9,2 bn. EBITDA in 2023 was 1,15 bn (internet revenue is adverse). This ends in an EV/EBITDA a number of of at present (28,4/1,15) = 24,7x EV/EBITDA in comparison with 5,3x for STEF and 19,2x for Americold.

EV Gross sales is 5,4x vs 0,6x for STEF and 4,3x for Americold.

EBITDA margins are 22% for Lineage vs. 8,6% for STEF and 20,1% for Americold.

Internet debt/EBITDA is 8x for Lineage (pre IPO, ex leases), 2,3x for STEF and 6X for Americold.

So we cansee that margins are clearly increased for the 2 US corporations, more than likely as a result of increased share of trucking gross sales in STEF’s P/L, however Lineage units a brand new excessive level for valuation. Being a comparatively massive US inventory clearly helps, however I suppose the foremost issue is positioning Lineage (and Americold) as a Actual Property firm is the “actual trick” , regardless of solely 3/4 of the gross sales are from warehousing. Logistic Actual Property is taken into account a “secure asset” and buyers appear to demand capital prices which might be vital decrease than “regular” corporates.

I used to be not in a position to evaluate Returns on capital or belongings, As Lineage makes use of a metric (Internet Working Revenue Yield) that excludes the (vital) Administrative prices. They appear to focus on Sept. 11% on that metric, the “true” ROIC could be 2-3% decrease.

In abstract, I’d not contemplate Lineage as an funding. The inventory appears very costly for a Chilly Storage Company (which for my part it ultimatley is). Nonetheless, they cleverly managed to place themselves as an actual property firm and actual property buyers appear to be very proud of low returns. Congratulations. However as soon as once more it helps my view that STEF, though indirectly comparable, is massively undervalued. We’ll see if and when the valuation hole is closing, however I’ll fortunately look ahead to a few years. And possibly this IPO will additional improve curiosity within the inventory. Or STEF in some unspecified time in the future in time will get the trace and the place themselves extra as actual property play.

IPO prospectus materials:

Competitors

Apparently, Lineage, regardless of being acitve in Europe, doesn’t even point out STEF as a competitor:

In line with STEF’s annual report, STEF has 11,6 mn Cubic meters of storage which interprets to 11,6*35= 0,41 bn Cubic toes and would make STEF globally the quantity 3 or 4 on this desk.

I’m not certain why they didn’t embrace STEF however when you do a comparability of listed friends one one peer is valued a lot decrease, some buyers may relatively purchase a budget one. That’s clearly hypothesis from my aspect, however I don’t assume that they merely “forgot” STEF as they’re lively in Europe, too.

Regional foot print:

That is their reginonal footprint globally:

There’s a clear Deal with the US. Apparently, Europe, which accounts for 20% of capability appears fairly fascinating. Some markets overlap with STEF (UK, Benelux), however general it appears much less like an actual community than a group of regional companies.

Energy prices:

That’s fascinating data. I’ve not seen energy prices seperated for STEF.

Warehouse age

One fascinating metric that the present is the age of the warehouses. They declare to have a bonus as a result of theirs are the latest one:

As a relaticely new firm (based in 2008) that is possibly not a giant shock. Unsure what which means in observe.

Boundaries to entry:

No shock right here, Chilly Retailer Warehouses are very costly to construct.

Development drivers:

Some fascinating points right here:

I didn’t have Urbanization on my Scorecard. Nonetheless, as this can be a persevering with pattern even in grime poor Europe, I fortunately take it up.

Cap Charges

A Cap Price in Actual Property means the “anticipated Internet Working Revenue” that investor require for an actual property funding. The potential provides an fascinating perception on the uS market:

Some fascinating KPIs:

That is an fascinating “per pallet” desk from the prospectus. Attention-grabbing to see that in whole, storage and dealing with prices ~300 USD per pallet annualized. That’s rather a lot.

Debt

This desk exhibits that together with lease liabilities, debt is even at 10,7 bn pre IPO:

Sort of Warehous Matrix:

Typical Expense Cut up:

Worldwide Chilly storage improvement capability:

This chart is fascinating. It exhibits that as an illustration France and Italy have comparatively little Chilly storage capability.