Category Archives: Bilanzanalyse

Reinsurance follow up: SCOR SE- Too cheap to ignore a P/E of 6x for 2023 ?

Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!!

Background:

After looking at Hannover Re and Munich Re a few days ago, I decided to include also Swiss Re and Scor in my analysis. Unfortunately, for both of these players, the CAGRs for profit etc. are meaningless as they were making losses in 2022. However, especially for SCOR I found a few numbers very interesting:

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DCC Plc (ISIN IE0002424939) – Extremely unsexy Business meets sexy Track Record at a super sexy Valuation

Disclaimer: This is not investment advice. PLEASE DO YOUR ON RESEARCH !!

As this post has become quite long, here is the Elevator pitch:

DCC Ltd, a 4,3 bn market cap UK listed, Ireland based company at a first look like a very boring, unremarkable collection of very boring distribution businesses. A second (or third) glance however, reveals a very stable , well managed distribution company that has been compounding EPS at double digit growth rates for the last 28 years and can be bought for a very modest valuation of ~10x earnings. The company clearly faces some challenges but this might be more than outweighed by very good capital allocation, company culture and growth opportunities.

  1. History

DCC has a very interesting history. It was founded actually as some kind of Venture Capital company in 1976 in Ireland and was led for 32 ears by founder Jim Flavin. After turning into an operating company, DCC went public in 1994. Over the years they acquired a lot of businesses, many of those where distribution businesses from oil majors but also in other areas such as health care and technology components.

What I find extremely impressive is their track record since they listed in 1994 and is available in each annual report:

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Royal Unibrew (ISIN DK0060634707) – A High Quality Beverage Compounder at a reasonable price ?

Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!!

The company:

Royal Unibrew logo

Royal Unibrew is a Danish Beverage company that I “discovered” during my journey through all Danish shares some weeks ago (too expensive back then but “watch”). I had also seen them some months ago in the Profitlich&Schmidlin portfolio.

The company is mostly active in Scandinavia and the Baltics where they have offerings in all areas (including a contribution agreement with Pepsi), whereas in some countries (France, Germany, Italy), they are running a focused niche strategy. Despite the name, Beer is only around 35% of their offerings (as of 2021), the other 65% are mostly non-alcoholic drinks from soft drinks to water and energy drinks.

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Hypoport AG Part 1: : Great Business but experiencing a “Wile E. Coyote moment” ?

Background:

Hypoport logo

Hypoport has been one of the sore points in my investing history. I have been looking at this company several times, quite intensively in 2013 but never “pulled the trigger”. Hypoport has been a “FinTech” before this expression has been used. The business is not so easy to explain and comprises 4 different segments with several companies within these segments.

Recently, the share price of the company has been hammered after they gave a profit warning, despite having decreased already -75% from their peak before that profit warning. Time to look at Hypoport again.

Business:

  1. Loan platform “Europace”

This is clearly the flagship product of Hypoport although it doesn’t seem to be well understood or known. Europace is a B2B market place that gathers different mortgage offerings and combines these offerings combined with other useful tools to professional advisers who then actually make the deal with retail customers.

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Knorr Bremse AG: German Mittelstand”Hidden Champion” with a few issues

Intro:

Knorr is a company I have been looking into now for some time. It is one of those “hidden Champions” that Germany is famous for. As I drive by their HQ on a regular basis, I decided to have a deeper look into them.

History:

Knorr logo

Knorr Bremse has a very interesting history. The company was founded in 1905 in Berlin and for a few years, BMW (in its original form) was actually a subsidiary of Knorr. In 1985, Karl Herrmann Thiele, who initially joined the company in 1969, took over the majority from the Knorr family and developed the company into a Global Player. The company is now headquartered in Munich and only went public for 80 EUR/share in October 2018.

Karl-Herrmann Thiele

Thiele died quite surprisingly in early 2021, the heirs still own around 59% of the shares via a foundation.

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Admiral Plc – Deep Dive and Re-underwriting the Stock

Disclaimer: This is not investment advise but some rather incoherent ramblings of an extremely incompetent former value investor. DO YOUR OWN RESEARCH AND NEVER TRUST ANONYMOUS DUDES ON THE INTERNET!!

On “re-underwriting” an existing position

While writing part 1 of the UK Insurance update and even earlier, during the analysis of Naked Wines, I realized that my investment process has (among other issues) one serious gap: I have no systematic way to reassess or “re-underwrite” a position, especially for those who are in the portfolio for a longer time.

I do a short review every year in my “xx stocks for 20xx” series, but I do not seriously analyse my longer term holdings unless there is a problem.

In some cases that works well, but in other cases, I have been missing things or the case goes far away from the original case. Due to time constraints, doing this every year is not realistic, but going forward, I plan to do this on a 3 year rolling basis for each long term holding.

Review of my initial Admiral case

My original Admiral investment case was from 2014 and can be read here. The initial “underwritten business case” was as follows:

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Naked Wines ($WINE) update – The Good, The Bad and the Ugly

Disclaimer: this s not investment advice. PLEASE DO YOUR OWN RESEARCH !!!

Naked Wines released their full earnings last week and the result was a full disaster with the share price down a whopping -43% despite the fact that the headline numbers were already known. It is a good reminder that even being down more than -60% from its top, a stock can still fall another -40% on one day. Although the stock was only a 2,9% position prior to that drop, it still warrants a deeper dive than usual.

The signs were already obvious

Before moving to the actual numbers and the report, I have to criticize myself for not acting on the stock despite the following issues that I had identified already some time ago:

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Inflation vs. Pricing Power for Chemical companies & Nabaltec follow up (ADD)

Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!!

Inflation & Pricing power

One of the obvious strategies for for investors in an inflationary environment is to pick companies that have “Pricing power”. Pricing power means that companies should be able to raise prices at least as quickly as costs rise.

Now one could try to do some deep thinking if and how different business models react to inflation. As I am a more “hands on” guy, my solution is to look at actual numbers and then try to draw my conclusion.

For any company that is producing material goods, the best indicator for pricing power in my opinion is Gross profit, i.e. the difference between selling price of a product minus the direct costs to produce them.

A company with pricing power should keep the gross margin or ideally even improve gross margins in an inflationary environment.

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Insurtech Massacre part 3 – Lemonade & Churn, churn, churn !!

Long time readers know that I have a soft spot for insurance companies. Some weeks ago, I started looking into Insurtech companies and then I looked into Lemonade’s 2021 earnings. Since my first post, Lemonade has lost another 1/3 of its value and is now significantly below its IPO price.

What I like about Lemonade is that they indeed created a “fresh” insurance brand, however the numbers were clearly challenging. My main takeaways from last time were as following:

  • Growth is slowing
  • marketing cost is increasing (per new dollar premium)
  • The business is not really scaling

Already a week ago, Lemonade issued its Q1 earnings. This time, I have compiled a few line items that I find interesting on a quarterly basis in order to analyze things more deeply:

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All Danish Stocks part 6 – Nr. 51-60

And another batch of 10 randomly selected Danish shares, this time, none of them made it onto the watch list. We have now covered almost 1/3 of all Danish stocks.

51. Ringkjøbing Landbobank A/S

Ringkjøbing Landbobank is a 3,3 bn EUR market cap bank active only in Denmark, that is surprisingly profitable with a ROE of ~15%. This is reflected in a very good share price performance and a rather high valuation at 20x trailing P/E.

ringbank

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