Wednesday 8 April 2015

Analysis of Tessenderlo 2015

Tessenderlo, a Belgian chemical company

Company: Tessenderlo

ISIN BE0003555639 | WKN 852064

Business: A Belgian chemical company. They currently have three operating segments which unfortunately is not well described on the home page yet but are structured as such in their annual report for 2014. The first one is Agro (liquid crop nutrients, water soluble SOP and crop protection), Bio-Valorization (gelatine, pharmaceuticals, body-care and bio-resources) and finally Industrial Solutions (pipes, water treatment and mining).

Active: 21 countries and 100 locations (I could not find an update on this information even though I guess it is now less due to sale of business units as well as other cost cuttings).

P/E: 20.8

Here you can find the previous analysis of Tessenderlo

contrarian values of P/E, P/B, ROE as well as dividend for Tessenderlo

The P/E for Tessenderlo is far too high for my liking with 20.8 and the P/B is also in the upper region with 2.6 which gives us a very clear no go from Graham.The earnings to sales are bad with only 4% and the ROE is ok but not more with 12.4%. The book to debt ratio is also a bit on the low side with 0.6.
In the last five years they have had a yearly revenue growth of -10% which is awful and this gives us a motivated P/E of around 8 to 9 which means that Tessenderlo is highly overvalued on the market today.
They pay no dividends, which is understandable, but also something that I do not like.

Conclusion: Graham says no to Tessenderlo and I am mixed. Luc Tack has still not managed to completely turn around the ship and out of the three business segments they expect two to do well in the near future but they seem to have no clear vision of how to get the Bio-valorization back on its feet again. I already own shares in Tessenderlo which I will not sell but based on this report I also do not see a reason to increase my holding any further since the P/E, P/B and no dividend payment is simply too bad news to me.

If this analysis is outdated then you can request a new one.

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