Sunday 21 February 2016

Analysis of Tessenderlo 2016

Tessenderlo, a Belgian chemical company

Company: Tessenderlo 

ISIN BE0003555639 | WKN 852064

Business: A Belgian chemical company. They currently have three operating segments : Agro (~40% of revenue with liquid crop nutrients, water soluble SOP and crop protection), Bio-Valorization (~31% of revenue with gelatine, pharmaceuticals, body-care and bio-resources) and finally Industrial Solutions (~29% of revenue with pipes, water treatment and mining).

Active: 21 countries and 100 locations.

P/E: 14.5

Here you can find the previous analysis of Tessenderlo 2015

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

The P/E of Tessenderlo is acceptable with 14.5 and the P/B is also acceptable with 2.4 still together it becomes a no go according to Graham. The earnings to sales are not very impressive with only 5% but the ROE is looking very good with a bit over 16%. The book to debt ratio is so, so with 0.7.
In the last five years they have had a poor yearly revenue growth rate of -5.7% (it is however improving) which then gives us a motivated P/E of 8 to 10 which means that Tessenderlo is today slightly overvalued by the market.
They do not pay out any dividends which I do not like.

Conclusion: Graham says no to Tessenderlo and I say yes. The P/E, P/B and the ROE are all ok and in one or two years from now I would not be amazed if they will also start to pay dividends. The most important thing with Tessenderlo, for me, is the pilot and his co-pilot and for that reason alone I find Tessenderlo to be a good investment. I will remain as a shareholder in Tessenderlo and I will pretty soon get diluted due to the formation of the Picanol Tessenderlo group.

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