Since our previous article, the title OPEC grew by 10.6%. In a little over 3 months, you certainly will find this excellent performance, especially with the stock market turmoil of the period!
Certainly, performance is significant, but the discount on the last Net Asset Value (NAV) per share is still exaggerated.
C A s usual, the company has released a very nice presentation on the 2009 accounts. You can download it here .
Companies portfolio had an activity slightly lower than in 2008 (-6%) but maintained their margin with level EBITDA average of 16.6% in 2009! This is an excellent level of profitability.
Finally, the model of growth and recurrence of the activity of the main interests of OPEC are good omens for the patient investor .
We will keep following points in particular as regards the NRA and its evolution:
summarize the three points:
1. If EBITDA of equity portfolio grew by 10%, the impact on the NAV per share will be 3.54 euros .
2. The debt of EUR 10 million, will mechanically increase the NAV 1.65 euros.
3. Rising stock of comparable 10% will have a positive effect on the NAV per share of 0.65 euros.
If we retain the first two points which are likely to be achieved in the medium term, the NRA will increase by 5.19 euros per share. That's the magic of leverage which improves yields!
We will not consider the third hypothesis that values only the companies held in portfolio by comparable, which has nothing to do with fundamentals.
published NAV per share at March 31, 2010 is 18.40 euros per share. You can read the official publication here.
The discount
At a closing price (21.05.10) from 8.64 euros, the discount is greater than 50% . The potential of the stock relative to its last known RDA is 113%!
If we consider the two as probable hypothesis we have just seen, the NRA can reach € 23.59 = € 18.49 (NAV at 31 March 2010) + 5.19 euros ( EBITDA growth of 10% and repayment of debts of 10 million EUR). In this case, the potential would be 173%.
course, that said leverage, also called " Massu effect. That is to say that the size of the debt can completely screw up the plans of the private equity company if the recurrence of the activities of its holdings falling and / or profitability in recent decreases. It is possible that this pathway is emerging in the months / years coming, and if so OPEC will be unable to cope with debt service.
Weigh the pros and cons before investing in this kind of title. Your opinions are welcome.
Ticker: OPEC
course the day of publication: € 8.64 (da you closing 21.05.10)
Yield: 10.6 %
Tip: PURCHASE
Main risk: highly leveraged
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