Italian updates – Piquadro, Sol Spa, Emak

Reporting season in Italy. Among my portfolio and watch list, several companies issued relevant material.

Piquadro:

Piquadro had a sort of “trading update” which for some reason cannot be found on the homepage but for instance here.

Although sales went up 4.3%, Profits declined from 9.1 mn to 7.8 mn (0.18 EUR per share to 0.156 EUR per share). And they are cutting the dividend from 0.10 EUR per share to 0.06 EUR.

Based on my initial valuation, Piquadro is still within the base case (20% EBITDA margin). So for the time being no action, but a reminder to check the annual report how non-Italien sales and own shops performed against the other segment.

Sol Spa

Watchlist stock Sol Spa has issued two interesting pieces of information. First of all, they were able to place a 12 year private placement bond at 4.75% in USD. With 12 year USD swap rates at around 2%, this represents a credit spread of around 2.75%. This is around 1.5% lower than Italy has to pay for the same duration. So we clearly see that a well managed Italian corporate can finance cheaper than the Italian Government !!!

Secondly, they have issued an investor presentation which shows that for some unkown reasons they are also investing in Hydro Power in Slovenia and Macedonia. I am not sure how this fits into the corporate strAtegy, but it explains part of the increase in Capex.

Q1 results are a mixed bag. Increasing sales but a reduction in margins. Capex still high as the aggressively move into Eastern Europe (Bulgaria, Albania).

Difficult stock. Still on watch.

EMAK

Emak had issued Q1 numbers already a couple of weeks ago. Interestingly again the acquired companies dare doing relatively well. Based on the first quarter, Emac could earn around 0.08 EUR per share which would result in a 2012 P/E of around 6.

5 comments

  • First thing i have to say, great blog! And i post my question in this italian thread: have you ever made a closer look into Danieli IT0000076502 ?

    • hello,

      thanks for the comment. No, I have never looked deeply into Danieli. They look cheap but I do have a kind of “mental model”: If the customers of a company do badly, then the supplier sooner or later wil have also problems. As far as I understand, they build steel mils and plants and those guys do have problems. That’s why I actually never looked into them despite their “dirt cheap” valuation.

      mmi

  • Hi, any thoughts on CAI Cairo Communication SpA? It seems to be the only stock with a history of no debt (now with a net cash representing 35% of ) … http://www.cairocommunication.it/images/2012/marzo2012/starconference_milano27%20marzo2012.pdf

  • Hi, The report is available o their website, but only if choose the Italian version of the press releases (link: http://www.piquadro.com/it/statics/investor_relations/comunicati-stampa-e-avvisi-comunicati-2012/). Just had a quick look and what I didn’t like that 50% of their dividends have been financed by debt issuance (free cash flow of EUR 2.5m vs dividends of 5m). I for my part think debt financed dividend payments are not consistent with the desire of growing the company. At least they addressing this issue by lowering the dividend this year. What is your opinion?
    Cheers
    Max
    PS For wht it’s worth I recently had a look at Piquadro products in their store in ROme, they are quite nice and apparently pretty good quality.

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