After the spaghetti westerns, Value and Profit we are proud to present investment in value ... Spaghetti ! :-)
Do not get me wrong! This is not a substitute for investment. This is a real value style approach ... the land of pizza.
The title that we present today before our eyes a rare situation where the safety margin seems so important that it seems unimaginable to lose under this title.
Indeed, visibility, recurrence of sales, profits and undervaluation of assets are to us a cocktail of value creation.
This title is listed on the Milan stock exchange, it is Vianini Lavori .
The Italian company has three main activities, as summarized below:
His heart of business is construction. For example, Vianini involved - among others - to the gigantic construction site of the new subway Roman Line C. The backlog of this activity is 1 000 million EUR. Equivalent more than 4 years of activity .
Regarding investment policy, Vianini owns shares in concessions (water system and train stations). Who said concessions, said recurring revenue. Again the visibility is good.
Cementir - a specialist in concrete and other materials to niche markets - is another major group participation. A ladle, considering that owns 25.5% of Vianini Cementir a course of 3.10 euros, participation alone is valued at 25.5% x 493 million = £ 125.7 million EUR.
Investments at 31.12.2008
Valuation
We will attempt to evaluate this holding diverse. The figures below are from the financial documents provided to 31.12.2009.
We will value the group only through its balance sheet.
Current assets = 214.6 million EUR
Total debt = £ 168.1 million
==> net = net assets-EUR 46.5 million
Financial contributions:
We will resume one by one the items on the balance sheet:
capital investments valued at cost = £ 59.4 million capital investment
valued by equity = £ 317.3 million
Investments in securities number = 134.1 million EUR
Either a total of: EUR 510.8 million
In a conservative approach in part of the evaluation of a holding company of participation, it is common to add a discount. We'll take a safety margin of 20%.
assets Vianini long term will therefore be estimated as follows: EUR 510.8 million x 80% = £ 408.6 million.
Now add both payments. "
Net Current assets-net assets + long term = 46.5 + 408.6 = 455.1 million EUR.
We conservatively estimated that 455.1 million euros representing the scrap value of the Italian group.
Gold this level of recovery, we not only value:
1) the potential for business growth. During the last 6 years, Vianini has seen its capital grow on average 6% per year with an average ROE of 9%
2) the profits of the company. In 2009, Vianini generated a profit of EUR 21.1 million. What makes us a PER of 9.7.
future profits are free! And yes, that gift!
Note also that the net cash (liquid cash - debt) is 128.2 million EUR 31.12.2009 and a dividend is paid in years. In 2010, it will be 0.10 euros, or a yield of 2.15% .
During the current 4.66 euros, Vianini Lavori is valued by the market, 204.1 million euros.
This means that the potential for recovery is important.
Compared to equity 571.3 million euros, potential = +180%
Compared to its scrap value of EUR 455.1 million, potential = + 123%
To summarize, Vianini what is it?
- A discount of 55% on its scrap value (64% of its equity)
- a PER \u0026lt;10
- a historical ROE of 9%
- a dividend of EUR 0.10 (2 , 15% yield)
- a recurring activities
concessions - an order book of EUR 1 000 million (4 years of activity).
Ticker: ALV
Course on the day of publication = € 4.66
Tip: PURCHASE
Identified Risk: discount related to holding status.
Related documents
Displaying results 2008: http://www.vianinigroup.it/allegati/ files/2009/05/1941.pdf
Cementir Presentation (October 2009): http://www.cementirholding.it/allegati/files/2009/10/6651.pdf
