Tag Archives: Bongrain

Some reader recommendations: M6, Bongrain, Banknordik

First of all, thank you to anyone who recommends investments on the blog. It is always great to get new ideas. So let’s quickly check some of them if they would be interesting from my point of view:

Bongrain (ISIN FR0000120107)

Bongrain is a company I have been looking into quite often over the last view years. For some reason it always appears to be cheap.
Currently it trades at quite low multiples:

P/B 0.6
P/S 0.2
P/E Trailing 15, P/E 2012 ~8
Div. yield 2.7%.

However, despite the significant discount to book, Bongrain does not score well in my Boss Score. My model only calculates a fair value close to current prices.

The reason is mainly that ROE is simply relatively low. Over 10 years they managed 8.5% ROE over the last 5 years only 6.5%. They were always profitable but profitability is not really stable. L.D.C for instance shows better ROEs with less volatility. There would be clearly some “mean reversion” potential but I think that there are more interesting stocks in France at the moment.

For my investment philosophy, it is vital that a company earns at least its Cost of capital to make it a worthwhile investment. Bongrain seems to struggle with that. Unless there are dramatic changes in management or shareholder structure, I would prefer L.D.C. against Bongrain, but maybe I manage to have a more detailed look at Bongrain at some point in time.

M6 Metropole Television

M6 looks great from a free cashflow perspective and ROE, ROA and ROIC. The company has net cash (~2-3 EUR per share). In my model, it scores Ok, but due to the fact that it already trades at 2.2x book, the upside is limited.

Additionally, M6 is one of the shares where stated EPS do not correspond well with my own calculated “total return”. Especially in 2010, my model actually shows a loss:

EPS BV per share Dividend Tot Return Delta EPS
31.12.2007 1.29 6.07 0.95    
31.12.2008 1.07 6.17 1.00 1.05 -2.4%
31.12.2009 1.08 6.37 0.85 1.20 11.7%
31.12.2010 1.22 5.32 0.85 -0.19 -141.7%
30.12.2011 1.17 5.50 1.00 1.03 -13.9%

Instead of the expected increase in Book value based on the stated EPS, book value per share decreased in this year significantly. One would have to check what the reason is for this, but it doesn’t seem to be the result of a share repurchase.

In general, I do have also reservation against TV stations. There is a clear underlying shift going on, away from traditional media to internet media. I do not have a really good insight how far this would go but one can see the “classical” patterns which were mentioned in the book “The innovators dilemma”:

– there seem to be a series of “disruptive innovations” rather than a sustaining innovation
– traditional companies struggle hard, after ignoring this they now seem to overpay for access
– truly disruptive innovations are quite unpredictable and established companies have only a very small chance to prosper in such an environment

In those cases, in my opinion, it would be very dangerous to rely on past numbers and assume mean reversion. For the time being I would be very uncomfortable with “traditional” media company, unless it would be a “hard asset play”.

So again, M6 would not be one of my favourite French stocks at the moment.


Banknordik came up in the Gronlandsbanken analysis as the only other bank being active in Greenland.

Banknordik interestingly is the major bank in the Faeroe Islands, another one of those “Denmark related” islands.

Other than Groenlandsbanken, Banknordik seems to do 50% of their business in Denmark and only 50% in Faeroer. They seem to have taken over parts of a no bankrupt Danish bank But nevertheless, the stock looks appealing to me as I start to “warm up” for “specialist” financial stocks.

Banknordik looks like a very interesting stock and might be a “complimentary” position to Groenlandsbanken. So I will definitely look deeper into that one.