Thursday 27 March 2014

Analysis of Hoftex Group

A German yarn and fabrics company

Company: Hoftex Group

Business: A German company producing yarn and fabrics. They have four divisions: Hoftex Yarn & Fabrics (they brag about using the latest machines from Picanol that I have previously analysed to produce fabrics for book-binding, sunscreen, abrasive belts, v-belts or for protective clothing), Neutex Home Decoration (all kind of decorative fabrics for pillows, curtains etc.), Tenowo Nonwovens (used in several details in for instance cars and smaller parts of clothing, most successful part!) and finally Hoftex Immobilien (they try to rent out their excess office space)

Active: Production is in 11 countries in Europe, North America and in Asia and they claim to make world wide sales...

P/E: 9.7

Comments: Their holding company homepage was horrible. Several links were not working and information was for years not updated on the English site version but happily on the German so I managed to get all info needed. Second thing is that their annual report for 2013 is still not published so this analysis concerns the result from 2008 to 2012.

This company was analysed due to a request that can be found here.
contrarian values of P/E, P/B, ROE as well as dividend

The P/E of Hoftex Group is excellent with 9.7 and the P/B is also great with 0.6 which gives us a very clear buy according to Graham. The earnings to sales are however very low with only 3% and the ROE is no good at all with only 5.7%. The book to debt ratio is however excellent with 2.4! In the last five years they have had a yearly growth of 2.1% which is more or less inflation and this gives us a motivated P/E of 9 to 13 which means that Hoftex Group today is fairly valued on the market. They pay no dividend which I do not like especially considering their ROE which shows me that they are not using the money to my advantage so I might as well get it out as cash.

Conclusion: Graham says yes to this company but I do not. Their yearly growth is simply not high enough (looking back even to 2004 their yearly revenue has from 2004 to 2012 been 190 million € +-40 million so no real development, no real drive from the management to change, to improve), the ROE is not good enough for me and I do not like when I do not get a dividend!

If this analysis is outdated then you can request a new one.

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