Category Archives: Autostrada

Short cuts: Installux, Maisons France, SIAS, EMAK


Installux reported 6m numbers. As they have already indicated, sales were down -10%. Interestingly, they managed to keep their EBIT margin at a constant 11%, despite higher depreciations.

This is very remarkable. The net result went down ~-11% mostly because taxes remained unchanged on absolute terms. At the end of the day, EPS for the first 6m was 13.80 EUR. If history is any guide, I would expect an additional 5 EUR EPS or so in the second 6m, resulting in 19 EUR EPs. Net cash went slightly down to around 16 mn EUR or ~53 EUR per share due to higher receivables which is normal for Installux in the first six months.

All in all, Installux is still one of the cheapest stocks around and the business seems to be surprisingly resilient and their cost base quite flexible.

Maisons France Confort

As expected, MFC is experiencing an even deeper decline in sales than Insatllux. Maybe it was also the weather, but sales are down -10.5%, excluding M&A by -15.4%. However they will publish results only in beginning of September. So lets wait and see. The stock price remained surprisingly resilient.


SIAS released 6M numbers as well. Numbers were Ok. Traffic seemed to have picked up later in Q2. Overall, as now the “special” is gone, one of my lower conviction ideas. Good dividend and still below book value but that’s it.


Finally, EMAK released the 6M report. Despite unchanged topline sales, they managed to significantly increase profitability which I find remarkable (profit margin 6.2% vs. 4.4%). Even moreinteresting, their European sales increased nicely despite the unfavourable weather and sales decreased mostly in Turkey. One more data point for my “gorilla theory”…. This is what they say:

In the “Asia, Africa and Oceania” the decline in sales is mostly due to the decrease in shipments to Turkey, tied to a moment of weakness of the local market.

They lowered slightly their guidance for 2013, but still the expect 38-40 mn EBITDA which would transale in somethin like 0.10 EUR profit per share.

Overall, EMAK in my opinion is on a very good way and has significant recovery potential from here.

Quick updates: Installux, EMAK, SIAS & ATSM

As I am not doing this fulltime, I sometimes miss if companies publish their results. In principle, for my “Value companies” I don’t think that one time period makes a big change in the overall investment case. However it definitely makes sense to look at existing companies at least once a year.


As reader Caque commented, Installux reported prelimary earnings a few days ago.

With 6.67 mn EUR or around 22 EUR per share, earnings were surprisingly good. Net cash is now at 18.8 mn EUR or 62 EUR per share. So trailing EPS ex cash is around (100/22) ~4.9 times, quite low for a company which earns around 15-20% ROCE.

2013 will clearly be a challenge for them, according to the last sentence of the statement:

L’environnement général incite Installux à la prudence quant à ses perspectives 2013. Le groupe anticipe un repli d’environ -8%. “Cette tendance se confirme malheureusement en terme de volume d’activité sur le 1er trimestre (-13%),

-13% in sales in the 1 quarter is quite substantial. On the other side, this might open up some interesting entry points during the year. Nevertheless it should be clear that France in general is going through a quite difficult year. As ussual, the stock price doesn’t do much and volume remains low:

One remark from my side: France and the Netherlands are Germany’s major trading partners. I cannot understand how people can be so positive about German companies and negative about Netherlands and France in particular.


EMAK came out with a investor relation presentation including preliminary annual figures already a few weeks ago.

Interestingly, the “old” EMAK business is doing quite poorly, profit is down 50% or so. The “new” businesses acquired from the main shareholder were holding up much better. So looking back, the dilution is not that big.

EPS was ~5 cent per share so we have a trailing P/E of around 10. If they really make good on their ambition level (38-40 mn EBITDA), the stock would be quite cheap. Let’s wait and see, no need to do something at the moment. This has 2-3 years more to play out.

The stock price at the moment seems to “lazily” trail the FTSE MIB to a certain extent:


SIAS came out with preliminary 2012 numbers already 4 weeks ago.

What was clearly an issue is the fact, that traffic declined significantly in 2012, much more than expected. So despite a overall tariff increase, revenues stayed flat.

The good news: On April 15th, they are expected to pay the special dividend of 90 cent per share , distributing what is left from the sale of the Chilean asset sale and the purchase of the concession.

Operationally, there seems to be additional preassure from the regulatory side, as agreed tarrif increases have been suspended by the regulator.

After the special dividend, a large part of the “special situation” aspect (extra asset) has now played out. Howver, the fundamental part looks not as good as I have though initially. I will need to decide if I hold on to SIAS as a “Normal” value investmetn or sell it at some point in the near future. Fundamentally, the company does a lot worse than I had exepected. Thankfully, the entry price was low enough and investors seem to liek special dividends.

The stock price has outperformed the FTSE MIB in the last 12 month by a margin of more than 30%. Quite significant for a purely domestic business:

Even more interesting:

Autostrada (“ATSM”) now caught up with SIAS ver 2 years as it turned out that the “Italian Job”, the Purchase of Impregilo,turned out to be a great special situation investment, netting Autostrada a nice profit.

Maybe time to switch back into the “Cheapie” ? Let’s wait and see. Definitely worth to check the Autostrada annual report this year.

Some thoughts on discounts for Holding structures (Porsche SE, Pargesa, Autostrade Torino)

In my post about Porsche SE, I concluded the following:

However on a relative basis I don’t think that there is a lot of upside in the Porsche shares, as I don’t see a quick “real” catalyst and a certain structural discount (20-30%) is justified due to holding structure and non-voting status of the traded shares.

Geoff Gannon used this summary to come up with his view on holding company discounts:

I do know something about holding companies that trade at a discount to their parts. And I don’t agree with that part of the post. If the underlying assets are compounding nicely – you shouldn’t assume a holding company discount is correct just because the market applies one to the stock.

So he is basically saying one should ignore the holding structure and look at the underlying only.

Interestingly, we had such a discussion on the blog about the same topic in the Bouygues post. Reader Martin commented that “one usually applies a 20-30% holding/conglomerate discount” which I didn’t apply in my sum-of-parts valuation.

So far this seems to be quite inconsistent from my side, isn’t it ?

I have to confess that especially for Porsche, I did not mention all my thoughts about why I applied a discount there. However maybe I can shed some light on how I look at “holding structures” and when and how to discount them.

For myself, I distinguish between 3 forms of holding companies:

A) Value adding HoldCos
B) Value neutral HoldCos
C) Value destroying HoldCos

A) Value adding HoldCos

This is in my opinion the rarest breed of HoldCos. Clearly, Berkshire Hathaway is an example or Leucadia. Those HoldCo’s add value through superior capital allocation capabilities of their management. In those cases I would not apply any discount on the underlying assets, however I would be hesitant to pay extra.

B) Value neutral HoldCos

Those are holding structures which exist for some reason, but most importantly are transparent and do nothing stupid or evil to hurt the shareholder. Ideally, they are passing returns from underlying assets to shareholders.

A typical example of such a company would be Pargesa, the Swiss HoldCo of Belgian Billionaire Albert Frère. They are quite transparent and even report their economic NAV on a weekly basisandpass most of the dividends received to the shareholders. Nevertheless, the share trades at significant discount to NAV as their own chart shows:

At the moment, we see a 30% discount for Pargessa. So one should ask oneself, why such a discount exists for such a transparent “fair” holding co ? I can think of maybe 3 reasons:

– The stock is less liquid than the underlying shares
– people do not really trust Albert Frere despite being treated Ok so far
– no one wants to invest into this specific basket of stocks

Nevertheless, one has to notice that even for such a transparent company like Pargesa, a 30% discount does not seem to be the exception.

C) Value destroying HoldCos

Here I have the privilege to have documented such a case in quite some detail, Autostrada Torina, the Italian Holding company for toll road operator SIAS SpA.

As I liked the underlying business, I thought buying at a discount, following Geoff Gannon thoughts that a nice compounding business at a discount is an ever nicer business.

However, I had then to find out the hard way that the discount of the holding company was clearly a risk premium. In this case, the controlling Gavio family “abused” the holding to buy an interest in another company (Imprgilo far above the market price. They couldn’t do this in the operating subsidiary, as the sub was subject to regulation. The Holding co stock recovered to a certain extent but in this case the underlying OpCo was clearly the better and safer investment

My lesson in this was the following: Stay away as far as possible from such “value destroying” HoldCos. They are totally unpredictable and doe not have any margin of safety.

So going back to our Porsche example, what kind of Holding company is Porsche ?

Well, it is definitely not a “value adding” holding. The question now would be if it is a “neutral” or potentially even “value destroying” hold co ?

In my opinion there are already some warning signs:

– Porsche SE already communicated that they will not distribute the cash, but build up an additional portfolio of “strategic participations”
– Porsche only issues detailed reports twice a year, accounting is rather “opaque”
– in my opinion, Volkswagen has a lot of incentives to achieve a weak Porsche SE share price in order to then acquire their own shares at a discount (and swap them into VW pref shares if possible) at a later stage. Common shareholders (Porsche & Piech family might get a better deal. Under German law it is possible to treat pref holders differently

Compared to Pargesa for example, I would definitely prefer Pargesa with a 30% discount to a Porsche pref share at 35% discount.

So to summarize the whole post:

– With holding companies, it is very important to determine the intention and risks of the holding structure
– neglecting or even “evil” holding management can quickly turn a “discount” into a real loss
– better err on the safe side in such situations
– in doubt, assume there is a reason for the discount if you cannot prove the opposite
– however for skilled activist investors, those situations might create potential. So maybe Chris Hohn has a different game plan.But don’t forget that a lot of famous Hedgefund managers (incl. David Einhorn lost a lot of money with Porsche/Volkswagen already in the past.

SIAS SpA – Deutsche Bank “buy” recommendation and risk free rates

Normally I tend to ignore any sell side ratings for the stocks I am interested in.

However, this time with the Deutsche Bank “buy recommendation” for portfolio Stock SIAS (target 7,70 EUR) I find it interesting how they justify their valuation in the summary:

Our target price of E7.7 is based on an SoTP, which values each concession with an individual DCF based on an 8.5% WACC (5.5% risk-free, 5.0% risk premium and beta of 1.3x). We subtract net debt and provision and we then apply a 20% discount to reflect lower liquidity than peers and risk of value destructive M&A. Sias trades at a 30% discount to the European peers: 2012E EV/EBITDA is 4.5 (vs. 7x for the sector) and 2012E PE is 7.4x (10x). Downside risks are regulatory changes, more negative traffic performances, capex delays and value-destructive M&A (see page 32).

This is highly interesting. As I have written in an earlier post about risk free rates, the CAPM requires to use the default free risk free rate in the currency of the issuer.

It is difficult to determine an “undisturbed” risk free rate in the EURO anyway and maybe the 10 Year rate for Bunds at 1,46% is too low, but using 5.5% as a EUR risk free rate is defintiely wrong. Even more as the Bonds outstanding from SIAS yield 4.9 and 5.4%, which is below the assumed risk free rate.

In my opinion, the Deutsche Bank assumptions double counts the Italian risk because they use a high Beta and a “risky” rate to discount rate. Just as another interesting point: SIAS beta relative to the Italian FTSE MIB is only 0.8.

Nevertheless it is interesting, that even with double counting Italian risk they still end up with a price target of 7,70 EUR which would imply a 65% upside from the current 4.70 EUR.

This shows how undervalued some of the PIIGS shares are at the moment.

SIAS SpA – Mixed Q1 report & special dividend

It was an interesiting week for SIAS SpA shareholders already. Today, SIAS published Q1 numbers.

Traffic decreased significantly, but was compensated more or less through tariff hikes.

The most interesting part of the press releae was however this one:

As already highlighted in Management Discussion & Analysis of the Financial Statements as of 31 December 2011, SIAS S.p.A. has signed an agreement on 24 February 2012 with Autostrade per l’Italia S.p.A. concerning the disposal of the entire stake held in Autostrade Sud America S.r.l. (representative of 45,765% of share capital) for an overall amount of EUR 565.2 million; on 8 March 2012 the first installment – equal to EUR 100 million – of the consideration has been collected. The predictable completion of the transaction in the above mentioned terms (expected by 30 June 2012) could result in the distribution of an extraordinary dividend, in one or more tranches, associated to the capital gain produced by the same disposal.

As I have written earlier, the capital gain has been around 380 mn EUR.

So this could mean a special dividend of up to EUR 1,50 per share. I consider this announcement as extremely positive, as the fear of Gavio using SIAS for further Impregilo purchases should be no longer valid.

Maybe this explains the crazy reversal int he stock price from yesterday’s lows:

Together with the normal dividend, at the current price of 4,80 EUR one gets back more than 40% of the shareprice in the next 12 months. That should be quite some support for the share price.

On this basis I will accumulate up to a full position beginning next week.

By the way, yesterday’s 1% purchase was executed at the VWAP of 4,39 EUR per share.

SIAS SpA stock tanking – what to do ?

At the moment, my portfolio position SIAS is tanking like crazy. Interstingly much more than Autostrada:

The reason seems to be quite obvious: People are worried that Gavio will use SIAS to fund further Impregilo Purchases.

Interestingly, there seems to be now an activist Investor on board who has voiced this concern publicly, Italian version here.

He is basically demanding that Gavio publicly announces not to use SIAS (and the cash proceeds from the South America sale) to fund further Impregilo purchases.

The current share price however speaks a different language. So what to do now ? In the case of Autostrada, it had paid to sell first and ask questions later.

In this case howver, I am currently inclined to wait as nothing has happened yet. The publicity of the activist investor will make it more difficult for Gavio to use the funds in a bad way for minority shareholders.

Lutetia Capital itself seems to be a contrarian event driven fundSuch an announcement of course would be highly beneficial for the stock. The boss of Lutetia is a Lazard veteran which is intersting as Lazard is a 5% shareholder of SIAS.

So at the moment I will watch and do nothing, howver I am tempted to “ride the coat tail” of the activist investor at some point in time and increase the exposure if they seem to be succesfull.

Edit: As AS said in the comments, price targets were adjusted downwards, but I usually try to ignore those “trend following” activities.

Edit: I jsut saw that already 3.8 mn stocks were traded whcih is 10 times the normal volume. Maybe this is some kind of sell out. So I will add 1% Portfolio Weight as of today to the SIAS position.

Portfolio updates – Praktiker, Nestle, SIAS, Piquadro & TUMI

Just to summarize some recent portfolio transactions:


In the last few days, Praktiker came back below my limit at 41%. So in toatl I bough now 641.000 nominal bonds at a “dirty price” including accrued interest of 41.62%. Clean price would be around 40.50%.


As announced yesterday, I sold the Nestle shares at 54.47 CHF. Including 2 dividends, Nestle produced a positive performance of 24.17% for the portfolio.

I kept the CHF hedge, Vetropack is now 100% hedged.


Also yesterday, I “pre” invested the SIAS dividend back into SIAS shares. Ex date was April 23rd, however payment date is April 26th.


Piquadro fell back below my buying limit of 1,50 EUR, so I will increase the position of currently 1%. Howver, tarding volume is relatively small. As always, I will sell short 50% of the purchase value with FTSE MIB ETFs.

The TUMI IPO by the way has been a great succes. The stock increased from 18 USD to 26 USD in the frist few trading days. This gives TUMI a valuation of 1.8 bn USD, which translates into P/S of 6 and EV/EBITDA of 30. Cpompared to this, Piquadro is valued at EV/EBITDA of 7 and P/S of 1.

I had hoped that the IPO of TUMI would represent some kind of “catalyst” event for Piquadro, but I think at the moment Piuqadro is overwhelmed by the Euro Crisis 2.0.

Finally, the net cash position of the portfolio after those transactions is currently 11.8%.

The Italian temptation – Autostrada / SIAS – revisited

In my previous posts I have always concentrated on Autostarda as a way to invest at a discount into SIAS, the operating company whioch owns all the Italian concessions.

However, after the IGLI deal and the drop in Autostrada’s share price, SIAS itself became cheaper.

Based on year end numbers, SIAS is valued as follows:

P/E 8.2
P/B 0.9
Dividend 9,1%

Market Cap: 1.2 bn
Debt : 1,9 bn
EV 3.1 bn

Relatively cheap, but as I mentioned before, SIAS basically had a “catalyst” event, the sale of its Chilean minority particpation. here is the section from the investor presentation:

• Sale agreement to transfer 45.8% stake in Chilean assets to Autostrade per l’Italia for €565mln cash consideration along with a discharge of debt guarantees of about €180mln. Sale price in line with the preliminary IPO evaluation of Sale of Chilean assets
• Unlock significant value from an investment asset, well above book value
• The transaction gives rise to a capital gain of €382mln (overall price of €565mln vs. a book value of €183mln)
• Sale will be finalized by 30 June 2012. €100mln advance cash payment have already been collected on 8 March 2012
• Cash proceeds from the sale of Chilean assets to be used for:
Potential use of proceeds
• Call option on 99.98% of Autostrada Torino – Savona” (valued at 223mln) expiring on September 2012
• Extraordinary dividend (increased pay-out for 5yrs)
• Additional resources for “green field” projects / other strategic uses
• Minorities acquisition of existing concessionaries

So what does that mean ? For sure we know now, that dividends will most likely increase, i.e. a dividend over 10% for the next 5 years is likely

From a valuation point of view, if we assume the purchase of the “Torino Savona” motorway goes through, we can assume the follwoing effects:

1. EV decreases by (745-223)= 522 mn EUR
2. EBITDA will increase by 32 mn EUR

So we will have an EV of ~2.6 bn and an EBITDA of around 588+32 = 620 mn. So EV/EBITDA will be reduced to 4.2 all other things equal because the minority share did not contribute to EBITDA.

If we look at other motorway operators, we see the following EV/EBITDAs:

Brisa 11.2
Abertis 10.1
Atlantia 7.6
Soc. Paris 8.7

So we can see that the cheapest comparable company in the universe is valued at least 50% higher than SIAS. Interestingly, the most expensive comapny, Brisa from Portugal actually received a takeover offer at the current 11x EV/EBITDA valuation.

A few more remarks:SIAS Bonds:

SIAS has a senior bond outstanding with maturity 2020 (XS0552569005). Interestingly this bond performed really strong after the announcement of the sale of the Chilean minority stake.

Corporate Governance:

This is something to explore further, but in my opinion SIAS as the holder of concessions is regulated to a certain extent. That is also the reason why the Gavio family seems to use Autostrada as vehicle for its transactions instead of SIAS.

Normally it would have been much easier to just use the sale proceeds at SIAS to purchase the IGLI stake but it seems that they cannot access it directly but have to upstream this via dividends.

So as a minority shareholder, interests are better aligned at the OpCo than at HoldCo (Autostarda).

Summary: SIAS really looks attractive right now, so I will start to establish a half position (2.5%) for the portfolio. 50% of this I will hedge with the FTSE MIB ETF short position

Quick news: EMAK Spa, AS Creation, Autostrada & SIAS & Impregilo

EMAK has published a new Investor presentation. Proforma 2011 P/E is around 7, P/B around 0.64. Still very cheap.

AS Creation:

The Russian JV partner has bought another 5% in AS Creation and holds now 10%. Despite the lackluster results of AS Creation in 2011, this is a very encouraging sign.

For me, this purchase should be counted as “insider transaction” as the Russian JV partner will be in the best position to judge the success potential of the Russian JV which is expected to start this year.

I am actually contemplating to fill up AS Creation to a full position (currently 3.7%) if the stock price weakens over the next few weeks.


Autostrada continues to implode. Interstingly the regulated subsidiary SIAS is doing relatively better:

In contrast, Impregilo continues to increase:

Impegrilo reported preliminary results this week with a 50% increase in earnings due to the sale of some South americen Assets. So there seems to be some real value in this company.

I am actually tmepted to get back into Autostrada at some point in time. They roughly lost 170 mn market value since the IGLI Deal, although the disdavantage dissapears with each increase in the Impegrilo share. I think when the capital increase is going to be announced, then it could be a good opportunity to get back in.

Total Produce, EMAK, Austostrada

Total Produce

For some reason, the stock price of Total Produce climbed significantly over the last few days. Now a part of this increase seem to be explained: Total Prduce joins the ISEQ 20, the main Irish stock index:

Total Produce plc, Europe’s leading fresh produce company, is pleased to announce that it has been advised by the Irish Stock Exchange that following the quarterly ISEQ 20 review, Total Produce will be joining the ISEQ 20 Indices, (ISEQ 20, ISEQ 20 Capped and ISEQ 20 Leveraged), with effect from close of business on Friday, 16th March 2012.

I don’t know how many index trackers exist and the weight is only 0.29%, but maybe it helps a little bit to attract some new investors.


EMAK released preliminary 2011 results last week.

“Pro forma” results of the combined EMAK would have been 13 mn EUR, a P/E of ~ 7.5. Results of “old” EMAK were surprisingly weak, whereas the “new” EMAK companies were doing a lot better. SO maybe the deal wasn’t such a rip off at all ? Let’s wait and see, but EMAK still looks very cheap at this levels despite the problems in the home market.


What a shame, Autostrada reported really solid numbers for 2011. Interestingly the Impregilo share price rose already above the level of 3 EUR which Autostrada paid for the share from it’s parent. I tios still below the 3.65 for the Fondiaria package, but the “loss” is definitely smaller.

« Older Entries