Updates: DOM Security, April SA, Metro Bank Plc & Metro AG

A few (random) updates on stocks I own or looked at in the past:

DOM Security:

Already 3 weeks ago, they issued a document how and when the merger will be completed. If I understood everything correctly, the ratio will be 20 SFPI shares for one DOM Security share and completion is on or around 13. November 2018.

DOM currently trades at 53 EUR, SFPI at 2,61 EUR, so the relative price is pretty efficient. I plan to stay invested and over time increase the position from 3% currently (after selling 40% at the tender offer at 75 EUR) to a full position. I think it makes sense to stay with founder Mr. Morel for the future.

April SA

April SA is a French Insurer/Broker that I owned until 2014. I had the stock on my watch list again but didn’t finish my write up.

Now it seems that the company will could be sold as some PE Players are interested:

French insurer April SA has drawn takeover interest from private equity firms including CVC Capital Partners, KKR & Co. and BC Partners as it weighs a sale amid a wave of industry consolidation, according to people familiar with the matter.

April confirmed it initiated discussions with its majorityshareholder as part of a strategic review that could lead to a change in its holding, according to a statement after Bloomberg’s report. The insurer said it had received “preliminary expressions of interest” and declined to comment further.

The stock price already went up by more than 30% which is considered a normal take over premium:

april sa

April had shown actually pretty decent growth in Q3 and I actually considered buying some shares but maybe this is not so sustainable and the founder wants to sell before it is getting worse again ? Who knows…

Metro Bank Plc

Metro Bank Plc was a UK challenger bank that I looked at more than 2 years ago. It looked like a potential “outsider company” and I knew some very good investors that invested back then.

This was my summary:

Summary:

At this stage I can already wrap up my “analysis” of Metro Bank. In my opinion, the two big issues are:

  1. The founder is very controversial (I would not lend him my wallet), which especially for a bank, is a problem in my opinion
  2. Although the business model has worked well in the US starting in the 1980ies, the “deposit gathering machine” does not create a lot of value these days with interest rates at or below zero.

As the stock is promoted well (“The Apple of banking”) and headline growth looks impressive, there could be clearly more short-term upside to the stock price, especially when the show a profit in one of the next quarters. So for anyone who likes to “surf the wave” it could be interesting.

Fundamentally, I do think that at the current share pRIce the stock is already very “richly” valued as I don’t see a sustainable business model to earn the required returns on equity in the long run.I see a large risk that Metro Bank is rather a “one-trick pony” which worked well once but most likely not a second time.

At some point in time in the future this could even turn out to be an interesting short opportunity when growth is slowing and defaults start catching up.

Well, it looks like that we have now come full circle:

metro plc

After doubling until early 2018, the stock now lost -50% ist back to start.

They had to raise capital in summer and since then things are going downhill. I am quite late but this could be potentially interesting to short all the way down….

Metro AG

Metro just released sales numbers for the full Financial Year. For the full year, Wholesale revenues were -1,7% in EUR vs -1,3% for 9 months. For the quarter, Russia was slightly better than Q3 but Eastern Europe (incl. Turkey) worse.

Real was really bad in Q4 which is not optimal as they wanted to sell it. Now they seem to want to sell potentially the Chinese operations  which to me looks a little bit desperate.

6 comments

  • Bought SFPI today at 2,23 eur, increase by 0.5% of portfolio.

  • REALISATION DE LA FUSION-ABSORPTION DE DOM SECURITY PAR GROUPE SFPI
    GROUPE SFPI et DOM SECURITY annoncent que leurs conseils d’administration respectifs ont constaté le 16 novembre 2018, la réalisation définitive de la fusion par absorption de DOM SECURITY par GROUPE SFPI, qui avait été préalablement approuvée, à une large majorité, par leurs assemblées générales du 13 novembre 2018, sur la base d’une parité d’échange de 20 actions GROUPE SFPI pour 1 action DOM SECURITY.
    La fusion-absorption, qui entraîne la dissolution sans liquidation de DOM SECURITY, a pris effet le 16 novembre 2018 à l’issue des conseils d’administration précités de DOM SECURITY et GROUPE SFPI. Elle sera enregistrée comptablement en Euroclear France, le 23 novembre 2018. La fusion- absorption sera rétroactive au 1er janvier 2018 sur le plan comptable et fiscal.
    Les nouvelles actions GROUPE SFPI seront admises aux négociations sur le compartiment B d’Euronext Paris sous le code ISIN FR0004155000 à partir du 21 novembre 2018. La radiation en Euronext Paris, des actions DOM SECURITY étant intervenue le 20 novembre 2018 après Bourse.
    GROUPE SFPI envisage de procéder d’ici au 31 décembre 2018 à l’apport à sa filiale DOM PARTICIPATIONS des titres de participation de certaines filiales reçus dans le cadre de la fusion- absorption de DOM SECURITY, afin de reconstituer l’organisation fonctionnelle du groupe DOM SECURITY.
    GROUPE SFPI se félicite de la réalisation des opérations précitées qui contribue à l’unification et la simplification de la structure du Groupe.
    Contact Sfpi Group
    Pierre-Paul FINI (Directeur Juridique Groupe) T. +33 (0) 146 220 900
    M. ppfini@groupesfpi.com

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