Disclaimer: This isn’t funding recommendation. PLEASE DO YOUR OWN RESEARCH !!!
As at all times with my extra detailed writeups, I’ll give attention to the final sections within the submit and fasten the total pdf for anybody within the particulars. And naturally the Bonus Sound Monitor.
- Elevator pitch:
STEF SA is a reasonably distinctive listed French firm that runs a “temperature managed” agrifood provide chain and logistics enterprise throughout 8 European nations. Majority owned by its Administrators and Staff (~72%) the corporate has compounded guide worth, earnings and dividends by 12% p.a. over the previous 22 years with little or no impression from any of the large crises (GFC, Euro, Covid, Ukraine) that hit Europe within the meantime.
This enterprise trades at an unimaginable low 8x trailing P/E which in my view, contemplating the observe file, their progress alternatives and the “important infrastructure” character is a “bonkers discount”.
Some shorter time period headwinds exist (rates of interest, French politics, agrifood inflation), however within the mid- to long run the set.up for very first rate shareholder return is superb, with very restricted basic draw back,
- Introduction:
I’ve appeared superficially at STEF every so often however for some motive, I by no means went deeper however stored it on my watch checklist. Solely lately, after I scored my watchlist extra systematically, STEF got here out as fairly engaging. As well as, the present political tensions in France motivated me to dig deeper.
- The Firm & The enterprise
3.1. What Drawback does STEF remedy ?
STEF is lively in “temperature managed” storage and transport of meals from the producers to both wholesalers, retailers or eating places. Many meals objects are perishable and the hotter the atmosphere, the quicker these things will go unhealthy. In lots of instances, going unhealthy can impact extreme well being issues for the last word finish buyer. STEF, with its triukcs and particularly warehouses helps to maintain meals cool and recent with out incurring too excessive prices for this service.
3.2. The Firm.
STEF SA is a French firm, Paris headquartered with a market cap of 1,4 bn EUR that’s lively in “temperature managed” transport and storage of meals. They’re lively in 8 European nations, the most important market is their residence market France.
The corporate is greater than 100 years outdated, nonetheless till 1987, the corporate was owned by SNCF, the Authorities practice operator. It was then privatized and at last listed in 1998 on the inventory market.
11. Professional’s and Con’s:
As at all times, at this stage a fast abstract over the Professional’s and Con’s for STEF;
Professional’s:
- Staff personal 18%, complete insider possession 73%
- Important logistic/infrastructure
- not very cyclical
- Superb long run observe file
- sale of loss making maritime enterprise in 2023 (at a revenue)
- Good reporting (no changes, natural vs. inorganic and so on.)
- market chief in Europe, competitors fragmented, Community results
- Strategic refocusing (sale of delivery in 2023, Well being logistics in 2024)
- Potential Inflection level for worldwide enterprise
- fascinating adjoining companies as progress alternatives
- First rate administration alignment
- First rate capital allocation / Capital administration
Cons:
- capital intensive (actual property)
- debt /increased curiosity price
- no exhausting catalyst
- at all times comparatively low P/E
- weak French core enterprise resulting from meals inflation in 2023
- political atmosphere France
12. Conclusion and Sport Plan
General, STEF appears just like the Archetype of firm that I’m on the lookout for: Boring, underneath the radar, nice observe file, first rate enterprise, first rate administration and a really first rate valuation.
In fact, investing into European small caps for the time being isn’t lots of enjoyable. Alternatively, that is additionally the rationale why you should buy into such high quality compounders at “bonker discount” costs.
The sport plan right here is comparatively simple: Sit again and watch them execute.
As SETF hits so lots of my necessities, I made a decision to allocate 5% of the portfolio into STEF at a share worth of round 116,50 EUR per share.
Why 5% ? As a result of I actually assume that the mix of enterprise high quality, observe file and valuation is sort of distinctive and really engaging. In comparison with Eurokai and EVS, the Upside appears comparable, however the draw back in my view is even higher lined by the defensive enterprise mannequin.
So as to partially finance this place, I offered my remaining Biontech place (~1% of the portfolio).
Bonus observe:
I believe this music matches very good to STEF’s core enterprise:
