Im Eingangsposting zu den WESTLB GS hatte ich ja verschiedene Gründe angeführt, warum ich einen hohen HGB Verlust (und eine damit einhergehende starke Abschriebung des GS) für eher unwahrscheinlich halte.
Insbesondere folgende Vorhersage ist nun mehr oder weniger schon so eingetreten:
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Two days ago, Solon AG, a German manufacturer of Solar panels filed for insolvency.
Solon has a convertible bond outstanding, which traded at around 6% of Nominal value before it has been suspended.
Many thanks to Winter who linked in the AZ Forum to the results of the exercise period for the subscription rights.
In total almost 99% of the subscritption rights have been exercised.
During the subscription period, which began on 21 November 2011 and closed on 13 December 2011, 26,976,676 rights were exercised, corresponding to an aggregate of 134,883,380 Shares subscribed, equal to the 98.974% of the 136.281.335 Shares offered in the context of the Capital Increase, for a total amount of euro 57,325,436.50.
It looks like that my Paranoia Scenario was indeed only paranoia:
In accordance with the commitment undertaken on 5 August 2010, Yama S.p.A. has exercised all the rights to which it was entitled in the context of the Capital Increase and in relation to all Emak S.p.A. shares it owns (corresponding to the 74,285% of the share capital of Emak S.p.A. and to the 75,368% of the share capital excluding the treasury shares owned by Emak S.p.A.).
Consequently, Yama S.p.A. subscribed 102,712,500 Shares, for a total amount of euro 43,652,812.50.
Following the subscription of the Capital Increase, Yama S.p.A. will hold the 74.285% of the total share capital of Emak S.p.A. (corresponding to the 75.368% of the share capital excluding the treasury shares owned by Emak S.p.A.).
It looks like YAMA has exercised exactly the number of rights they got from their initial stake and they did not sell or buy any subscription on a net basis.
So for the moment it looks more like really bad execution than an evil genius trying to squeeze out the minority shareholders.
This is a very atypical post for this blog, however once in a while, also value investors have to look at macro themes as well.
In the past few weeks, all the issues around the Euro, Europe and the financial crisis accumulated in the following thesis:
The only way out is if the ECB brings out the bazooka (printing money by buying Government bonds)
After the summit, the market seems to dissapointed because the polititians and the ECB did not bring out the “bazooka” that was expected.
April SA is a french specialty insurance and insurance brokerage company.
Currently, the company looks kind cheap, however not super cheap compared to other Insurance companies. Traditional ratios are:
P/E 7.4
P/B 1.1 (P/B tangible 2.4)
P/S 0.64
Div. Yield 3.9%
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Those investors who bought the 2016 Bond at par early this year will most likely be not happy with the current distressed price levels.
I had covered Praktiker several times and said that the bond will only be interesting at 40-50% of par. As the chart shows we are now at ~38%.
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Wenn man nur ein Video anschauen möchte, dann das Interview mit Seth Klarman und Charlie Rose
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Yesterday’s post to EMAK didn’t really contain a lot of hard numbers. So let’s look at some multpiles.
The acquisition itself is summarized in the most recent investor presentation.
In order to put the complete price tag on the acquisition, one has to make a few calculations. Based on the presentation, I would calculate the total purchase price (equity payment + assumed debt) as follows:
82,7 mn Equity paymnent
10,6 net debt Comet
2,0 net debt Raico
0,3 net debt Sabart
23.4 net debtTecomec
Total 119 mn EUR
EMAK gets the follwoing EBITDA (2010):
7.9 Tecomec
5,3 Comet
3,0 Sabart
0,9 Raico
total 17.1 EBITDA 2010 which would result in a purchase multiple of 7 times EV/EBITDA
After the acquisition, EMAK is targeting 3 mn EBITDA of synergies, sow inlcuding those synergies the purchase would have been priced at 6 x EV/EBITDA for 2010.
For EMAK this would mean after the acquisition ~ 100 mn EUR total debt. At current prices, EMAK’s equity is valued around 90 mn EUR. So total EV is 190 mn.
2011 EBITDA is expected around 40 mn EUR, the Group is targeting 58 mn EUR EBITDA for 2013.
Baes on this, the current share price represents ~ 4.7 EV/EBITDA for 2011 and around 3.3 x EV/EBITDA for 2013.
Historically, EMAK traded around 5-6x EV/EBITDA. The historical numbers show a rock solid steady company which was almost not impacted by any crisis:
| TRAIL_12M_EPS | EBITDA_PER_SH | BOOK_VAL_PER_SH | DVD_SH_12M | |
|---|---|---|---|---|
| 1999 | 0.046 | 0.145 | 0.518 | 0.020 |
| 2000 | 0.075 | 0.182 | 0.566 | 0.025 |
| 2001 | 0.097 | 0.237 | 0.628 | 0.034 |
| 2002 | 0.106 | 0.265 | 0.691 | 0.042 |
| 2003 | 0.112 | 0.276 | 0.757 | 0.046 |
| 2004 | 0.104 | 0.260 | 0.812 | 0.047 |
| 2005 | 0.110 | 0.262 | 0.880 | 0.047 |
| 2006 | 0.132 | 0.296 | 0.960 | 0.049 |
| 2007 | 0.179 | 0.353 | 1.079 | 0.057 |
| 2008 | 0.176 | 0.376 | 1.178 | 0.071 |
| 2009 | 0.112 | 0.258 | 1.222 | 0.049 |
| 2010 | 0.138 | 0.280 | 1.333 | 0.049 |
Finally, after a somehow slower first half year, the 3rd Quarter results acutally were quite good. Lower sales in the Italian home market were more than set off by increasing sales in emerging markets.
So let’s wait and see, but for a relatively defensive company, EMAK looks really cheap.
EMAK is an Italian manufacturer of different gardening tools, motor chainsaws, lawn mowers etc.
I discovered the stock when I was looking for Einhell peers a year ago. (Un)fortunately, the trading volume at that time was much too low to include it in the blog portfolio.
However I held some shares in my personal account, which I sold after this news message.
What happened was the following:
– the 80% shareholder decided to sell his other businesses to EMAK
– the size of the sold businesses is similar to EMAK itself, the valuation was at that time slightly more expensive than EMAK
– the purchase price should mostly be financed through a capital increase equal to 80% of EMAK’s Market cap
– the 80% shareholder guaranteed to take up his share of the capital increase, Mediobanca guaranteed the rest.
In any case, this deal looked “murky” from a corporate governance perspective and I decided to get out of the share and wait for the capital increase. The share price the went down from ~4 EUR to around 2,30 EUR last Friday before the capital increase.
Now this is where things really got strange:
EMAK decided to execute the capital increase in the following way:
– each holder of the old share (at that time price ~2,35 EUR got the right (ISIN0044778046) to purchase 5 new shares at a price of 0,425 EUR.
– So based on the old price, this resulted in theoretical price of the rights of 1,60 EUR, around two times the theoretical price of the shares after splitting the subscription right
– however, both the shares and the subscriptionn rights got y slaughtered starting on Monday.
Rermark: The Yahoo Chart doesn’t reflect the subscription rights since monday, on a like for like basis, the current share price is around ~1,20 EUR.
Currently, the shares trade around 0.58 cents, the subscription rights at 47 cents, after hitting a low of 31 cents.
The subscription right itself is fairly easy to value, the value is (current shareprice – 0.425 cents)*5 or around 75 Cents based on a share price of 0.57 cents.
When we look at the toal valuation of EMAk, at current levels of the shares, EMAK would be valued at ~94 mn EUR.
In my “home forum” Winter has calculated that based on the results of the first half year, the combined entity could earn around 25-30 mn EUR, which would result in an P/E of ~3-4.
If one buys the subscriptions rights now at let’s say 50 cents, one would buy the shares even with a further 10%-15% discount.
At the Milano stock exchange the price for the subscription right is currently oscillating between 0,37 EUR and 0,50 EUR, so this hardly looks like an efficient market to me.
Even taking into account the corporate governance issues surrounding the whole transaction, at the current prices EMAK looks like a compelling special situation.
So for the portfolio I will actually start with buying both, subscription rights + the shares as “special situation” Investment (as ususal, 20% max of daily trading volume).
value and opportunity 