Category Archives: April SA

Quick updates: G. Perrier, Maisons France Confort, April

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Some quick updates on French stocks:

G. Perrier

Already some days ago, G. Perrier announced preliminary 2012 numbers.

Highlights:

– Sales up 7% (+4% without acquisitions)
– Profit up 13.2% to 7.94 mn or 4.02 EUR per share

In my opinion, this is an absolut outstanding result if one considers that G. Perrier is more or less a purely domestic French company and clearly shows the quality of the company and their business model. I am not sure when the annual report is out, but as discussed perviously, I will increase the position further, target is now a full position.

Maisons France Confort

Also already a few days ago, Maisons France Confort issued annual numbers including the annual report. As some readers might remeber, i had two posts about them (part 1 & part 2), but didn’t include them in the portfolio yet.

Looking at the stock price action, it seems to be that market participants had expected better numbers or a better outlooK:

Final numbers were 2.70 EUR EPS for 2012. With around 7 EUR net cash per share, this translates into a trailing P/E of ~5.9. Of course, 2013 will not be easy for them, i guess the late spring in Europe will not improve things and the business model of MFC has much more exposure to the weak French economy. Nevertheless it looks like a potentially interesting cyclical entry point into a real good business. I will have to follow up on that one.

April SA

Quite similar to MFC, April came out with its 2012 numbers and the stock got hammered quite significantly.

The company earned 1.31 EUR per share, additionally there were some positive effects in the other comprehensive income. April clearly has the same problem as any financial services company which is very low interest rates. Nevertheless it is not clear to me, why the share price has now decoupeled from peer company AXA.

I will clearly have to look at the annual report, but so far I don’t see any reasons to sell.

Portfolio updates: AIRE KGaA, April SA, Cranswick, Dart, Installux

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AIRE KGaA:

For AIRE KGaA, I decided to accept the tender offer at 18.25 EUR per share. There is not a lot of upside left and I guess the stock will be really illiquid after the offer.

Installux

Whereas the built up of Poujoulat goes really really slow, For some reasons, last Friday almost 2.500 Shares have been traded. That’s almost 1% of the market cap. Interstingly, in Bloomber a new fund called “Agicam” showed up at the end of April with a 0.99% position. Due to those sales, I could now already built up a stake of 1.8% of the portfolio in Installux shares, a lot faster than I thought.

DJE Real Estate

The sell down of this position is quite cumbersome. Up to know, I could only sell half of the position so far. However prices are relatively stable.

Dart Group & Cranswick

Both shares were relatively active over the past few days, so I could establish 2.5% positions fopr both. Dart Group issued their “preliminary annual” statement as of MArch 31st, a very good write up can be found here at ExepctingValue.

For Dart I will wait for the final annual report in order to determine if I increase the position to the full amount (5%).

April SA

Since I ahve increased my buying limit for April to 11,50 EUR, I could establish a small position in the stock (0.6% of the portfolio). Of course I got punished and bought ~2% higher than today’s share price……

Cash is now down to around 16.5% of the portfolio, but taking into account the AIRE Tender Offer, Cash is around 21.5% of the portfolio. So plenty of room for 2-3 new ideas…..

April SA and the momentum issue

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I have written a couple of posts about April SA. In the last post, i decided the following:

At current prices (EUR 14,60 per share) and based on the underlying business developement, the risk/return profile is not attractive enough.

Now the stock price is close to last year’s lows and we certainly don’t see a lot of positve momentum:

After the reading of O’Shaughnessy’s book, momentum is such an important factor, that one should keep way from a falling stock. On the other hand I am quite sure that the business of April is worth much more than the current 10,80 EUR quoted on the stock exchange.

So should I wait until the stock gets more expensive and buy then ? This sounds still very counterintuitive for me. O’S strategy relies on not analyzing the companies but “data mine” for factors to produce historical outperformance.

Does a active value investor really have to wait until the stock gets more expensive before on invests ? I would agree for distressed or turn around companies. But in other cases this “negative momentum” might even create investment opportunities

By the way, April issued a relatively positive trading update for Q1 2012 and a comprehensive presentation in English for the 2011 results and the strategy.

As I really like April’s business model, I will ignore momentum and starting to build a position in APril from today. I will start with 1% and then increase in increments.

Edit: For some strange reason, the stock jumped immeadiately after my posting almost 9%

My limit was 11 EUR, so I did not get any shares and will wait for the time being.

Follow up April SA – No investment

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End of last year, I looked at April SA, the French Insurance broker (part 1 and part 2).

In March, April pre released 2011 numbers which were quite dissapointing.

EPS per share in 2011 were only 1.37 EUR per share, a drop of -30% vs. the 1.97 EUR in 2010. They also released a regulatory required detailed report in French here.

The problem is that one cannot really understand where the drop in profit comes from.

Sales were more or less constant, however personel expenses increased by almost 10%. Also a 6 mn profit in non op income turned into a -4 mn loss in 2011.

Although claims paymants and therefore technicla results from insurance have increased significantly, lower interest rates increased general costs and an increase in commissions paid more than off set this positive developement.

Deeply hidden in the document (page 145) one can find that also brokerage commission income only stayed flat. Based on what the company communicated, I had assumed that they wanted to increase this part and reduce insurance premium but that didn’t seem to have happened.

On the plus side one can see that free cashflow on the non regulated holding level recovered nicely and amounted to around 65 mn EUR before acquisitions. Also free cash on holding level increased by 40 mn EUR to 80 mn EUR.

Summary:
Despite good cash flow on holding level, the underlying business especially the flat brokerage commissions are disappointing and not coherent with the communicated startegy change. At current prices (EUR 14,60 per share) and based on the underlying business developement, the risk/return profiel is not attractive enough.