Disclaimer: This isn’t funding recommendation. PLEASE DO YOUR OWN RESEARCH !!!
As at all times with my extra detailed writeups, I’ll give attention to the final sections within the put up and fasten the total pdf for anybody within the particulars. And naturally the Bonus Sound Observe.
- Elevator pitch:
STEF SA is a reasonably distinctive listed French firm that runs a “temperature managed” agrifood provide chain and logistics enterprise throughout 8 European international locations. Majority owned by its Administrators and Workers (~72%) the corporate has compounded e-book worth, earnings and dividends by 12% p.a. over the previous 22 years with little or no influence from any of the massive crises (GFC, Euro, Covid, Ukraine) that hit Europe within the meantime.
This enterprise trades at an unimaginable low 8x trailing P/E which for my part, contemplating the observe file, their development alternatives and the “important infrastructure” character is a “bonkers cut price”.
Some shorter time period headwinds exist (rates of interest, French politics, agrifood inflation), however within the mid- to long run the set.up for very first rate shareholder return is great, with very restricted elementary draw back,
- Introduction:
I’ve appeared superficially at STEF once in a while however for some purpose, I by no means went deeper however saved it on my watch checklist. Solely lately, after I scored my watchlist extra systematically, STEF got here out as fairly engaging. As well as, the present political tensions in France motivated me to dig deeper.
- The Firm & The enterprise
3.1. What Downside does STEF resolve ?
STEF is energetic in “temperature managed” storage and transport of meals from the producers to both wholesalers, retailers or eating places. Many meals objects are perishable and the hotter the atmosphere, the quicker these things will go dangerous. In lots of instances, going dangerous can impact extreme well being issues for the last word finish buyer. STEF, with its triukcs and particularly warehouses helps to maintain meals cool and contemporary with out incurring too excessive prices for this service.
3.2. The Firm.
STEF SA is a French firm, Paris headquartered with a market cap of 1,4 bn EUR that’s energetic in “temperature managed” transport and storage of meals. They’re energetic in 8 European international locations, the most important market is their house market France.
The corporate is greater than 100 years outdated, nonetheless till 1987, the corporate was owned by SNCF, the Authorities prepare operator. It was then privatized and eventually listed in 1998 on the inventory market.
11. Professional’s and Con’s:
As at all times, at this stage a fast abstract over the Professional’s and Con’s for STEF;
Professional’s:
- Workers personal 18%, complete insider possession 73%
- Important logistic/infrastructure
- not very cyclical
- Excellent long run observe file
- sale of loss making maritime enterprise in 2023 (at a revenue)
- Good reporting (no changes, natural vs. inorganic and so forth.)
- market chief in Europe, competitors fragmented, Community results
- Strategic refocusing (sale of delivery in 2023, Well being logistics in 2024)
- Potential Inflection level for worldwide enterprise
- attention-grabbing adjoining companies as development alternatives
- First rate administration alignment
- First rate capital allocation / Capital administration
Cons:
- capital intensive (actual property)
- debt /increased curiosity value
- no laborious catalyst
- at all times comparatively low P/E
- weak French core enterprise as a result of meals inflation in 2023
- political atmosphere France
12. Conclusion and Sport Plan
General, STEF seems to be just like the Archetype of firm that I’m in search of: Boring, underneath the radar, nice observe file, first rate enterprise, first rate administration and a really first rate valuation.
In fact, investing into European small caps in the intervening time is just not a whole lot of enjoyable. Then again, that is additionally the explanation why you should buy into such high quality compounders at “bonker cut price” costs.
The sport plan right here is comparatively simple: Sit again and watch them execute.
As SETF hits so a lot of my necessities, I made a decision to allocate 5% of the portfolio into STEF at a share worth of round 116,50 EUR per share.
Why 5% ? As a result of I actually suppose that the mix of enterprise high quality, observe file and valuation is sort of distinctive and really engaging. In comparison with Eurokai and EVS, the Upside appears comparable, however the draw back for my part is even higher lined by the defensive enterprise mannequin.
As a way to partially finance this place, I offered my remaining Biontech place (~1% of the portfolio).
Bonus observe:
I believe this track matches very good to STEF’s core enterprise: