Precia 09.07.10: Cheap Growth Portfolio paid The second company in the portfolio (11.7%) is PRECIA .
Activity
Precia specializes in the design, manufacture and marketing of weighing commercial and industrial. The group's activity revolves around two poles :
- sales of equipment weighing: weighing standard weighbridges for trucks and cars, instruments mix bulk bin. (Make-Precia Molen)
- services: installation services of new equipment, maintenance and repair of all brands of weighing, testing equipment used in trade.
PRECIA still makes 66% of its turnover in France, which augurs still great potential for growth abroad with its European offices in HOLLAND, ENGLAND, IRELAND, BELGIUM, POLAND, REPUBLIC CZECH and SCANDINAVIA and two locations outside Europe: in MOROCCO and India.
The interesting point is the recurrence of sales related to the maintenance activity representing 37% of the activity but 50% of profits . This activity is more stable over time and more profitable.
In 2009, despite a decline of 8.4% of its turnover, its profit fell by only 6.6%. This shows cost control management in a difficult period for a company accustomed to growth. Indeed, it is noteworthy that during the last 5 years the company grew its business by 22% and increased its profit by 2!
financial structure
Equity retirees of intangible assets on 31.12.2009 is EUR 25.4 million, or 44.3 euros per share.
The company has no debt. It has net cash of all borrowings of EUR 8.4 million, or 14.7 euros per share.
Valuing
Discount on equity of 10%.
Big Cash = 37% of market capitalization.
With a net profit of 6.6 euros per share in 2009 to over € 39.0, the PER was 6.1.
The company is worth less than its own funds as it has a history of growth rather flattering! All with one of the many benefits of the weaker Paris market.
Summary:
- a discount of 10% on its equity
- an abundant cash
- a company whose family Escharavil founder owns 60% stake
- a P = 6
- a dividend of 0.90 euros (2.25% yield)
- a recurrence of the activities of higher margin services (mainly maintenance)
- growth prospects not valued
Conclusion
Valuing PRECIA ridiculous is because of its liquidity weak: only a few tens of securities are traded each week. It is indeed a strong constraint for the investor who is not patient.
For investors seeking value in the performance with a time horizon long term (at least 5 years), PRECIA is a good compromise "value and growth."
You know a lot of business without debt worth less than their own funds, which have doubled their advantage in 5 years and are worth less than 6 times earnings for the year?
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