MIKO BV – Quick comparison with Groupe Guillin SA (FR0000051831)

In my MIKO BV post a few days ago, Winter commented correctly, that the plastics division of MIKO looks similar to what a French company called Groupe Guillin SA is doing.

At a first glance, Group Guillin looks even more interesting with the following valuation metrics (in brackets MIKO):

P/B 1.0 [1.24]
P/E 6.8 [11.8]
P/S 0.3 [0.5]
EV/EBITDA 3.6 [5.5]

So Guillin does almost the same but is much cheaper. Cheaper is always better for value investors, isn’t it ?

Guillin looks also quite OK in my Boss model and even shows better free cashflow so what is not to like ? ROEs look Ok as well as this table shows:

31.12.2001 19.3% 9.6%
31.12.2002 27.0% 14.0%
31.12.2003 17.6% 12.6%
31.12.2004 12.0% 11.0%
30.12.2005 15.2% 10.0%
29.12.2006 10.4% 7.3%
31.12.2007 11.5% 8.4%
31.12.2008 7.0% 6.0%
31.12.2009 13.7% 10.4%
31.12.2010 13.4% 7.6%
30.12.2011 7.3% 5.3%
31.12.2012 13.4% na.

However, ROICs don’t look so great as Guillin especially since 2006, when they grew quite quickly after 3-4 years without growth but ROIC suffered significantly

Lets compare this with MIKO’s plastic segment numbers:

MIKO plastics          
  Assets Libailities Net invested assets NI ROIC/ROE
2007 29.3 5.6 23.7 2.40 10.1%
2008 35.1 4.5 30.6 2.16 7.1%
2009 32.4 4.35 28.05 5.17 18.4%
2010 39.4 6.1 33.3 4.55 13.7%
2011 42.9 5.7 37.2 4.04 10.9%
2012 46.7 6.7 40 4.12 10.3%

So we can clearly see that MIKO consistently generates significantly higher ROICs than Guillin (in some years 5-6% more) than Guillin. Guillin uses leverage to achieve OK ROEs, while Miko doesn’t use leverage. Also net margins are on average 2-4% higher for MIKO plastics than for Guillin.

So in my view, the MIKO plastics business looks much better quality than Guillin, despite the fact that the MIKO plastics division is only 15% of Guillins sales. So scale doesn’t seem to be the deciding factor, it looks like that MIKO has found a more profitable niche than the larger Groupe Guillin. As far as I understand, Guillin sells direct to supermarkets while MIKO’s clients in the plastics division are consumer product manufacturers.

I have been looking at Groupe Guillin actually quite often, but the low return on invested capital kept me away. Although one has to say that the stock performed quite well over the past years, also compared to MIKO:

So Guillin is clealry not a bad company, but in direct comparison I think MIKO has greater potential (and a better downside protection) than Guillin.

One comment

  • Hi MMI,
    from my point of view, your considerations do not really make sense: You buy a higher ROE for a clearly and significantly higher valuation in all ratios. While I understand the point of the ROI/ROE perspective (the compounding), I believe that it does not make sense at all to look at margins: It is simply a relation between pe and ps. For a higher margin, you always have to accept a higher price-to-sales-ratio, and that is the opposite of what I consider as value investing – this is quality, growth investing or whatever. The margins (and also the ROx) have no meaning from a mechanical point of view, nor from a logical one: If margins remain low a Guillin and high at MIKO, then I still have the cheaper stock with Guillin. If they equal some day, than it will be even better. There is no compounding or anything else, just a typical error in reasoning. But that’s just my point of view – it is always interesting to read a qualified other opinion.
    Best regards

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