Wednesday, 2 May 2018

Analysis of Tessenderlo 2018

Logo of Tessenderlo 2018

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: 57.5

To find out more concerning Tessenderlo then please go to analysis of Tessenderlo 2016.

Contrarian analysis of Tessenderlo 2018 with P/E, P/B, ROE as well as dividend.

The P/E of Tessenderlo is awful with 57.5 and the P/B is ok but not great with 2.3 which gives a clear no go from Graham. Earning to sales are too low with only 2% and the ROE is also horrible with 4% while the book to debt to book ratio is acceptable with 0.8.
In the last five years they have shown a yearly revenue decline of -1.5% which is not good and therefore gives us a motivated P/E of around 8 which means that Tessenderlo is overvalue by the market today.
They pay out no dividends.

Conclusion: Graham says no and so do I. Tessenderlo needs to start proving themselves before it will be interesting to push in more money there again. Now they have bought themselves, probably, a massive revenue increase that will most likely appear during the 2nd half of 2018 but they did that with cash and by overtaking debt. I will remain as a shareholder and have had until today's date a good development on that investment which has probably been more due to Luc than anything else. One day, not very far away, investors will want to see something concerning Tessenderlo.


Garry said...

Hi, the net profit is highly impacted by non cash currency fluctuations. Therefor I think your analysis is a bit oversimplefied. Look around cashflows and debt, and you have another story. Investing is trying to see through the numbers...

Fredrik von Oberhausen said...

You always keep pushing me to look deeper Garry! I like that! They have a very small debt but it is increased by around 350 million if I remember correctly which will give them around 1.1 billion debt versus ~0.6 billion in equity which is still a value that is of no concern in my eyes. It is however a lot of things happening around Tessenderlo which leads to uncertainties. At some point Luc planned to take it over with his sewing machines company. Then that was stopped and now Tessenderlo step in and buys the rest of an electrical company. If Luc would not have been running the show then I think that I would have been concerned as an investor at this stage. On top of this my I have bought as much in Tessenderlo as I can allow myself to do which is additionally a reason why it is a hold for me.

Are you buying, selling or holding Garry? What is your motivation for either?