Company: Hamburger Hafen & Logistik (HHLA)
Business: A German Harbour and logistics company that are present in the biggest port of Germany dealing with the loading and unloading of containers as well as transport via railroad or trucks to bring the goods to their clients. Besides from logistic they have property in the harbour and large fruit & vegetable storage.
Active: In Germany and especially towards eastern Europe. It will be interesting to see how the effect will be of the Chinese train connections that very soon will connect directly to Hamburg. Will HHLA unload much less because everything from China will go by trains? Will it become easier and cheaper to reach east US by going over Europe first with the train? I really have no clue but I see big risks as well as chances and I am not able to value it.
P/E: 17.4
As I wrote in an article previously which can be seen here I wanted to add HHLA to my list of company that should be analysed and here it therefore comes.
The P/E for HHLA is fairly high with 17.4 and the P/B is far, far, far too high with 2.2. This means that it is definitely not a stock to invest in according to Graham. The manage to get 6% out of the earnings to sales which I find ok. The book to debt is so, so with 0.5 however in the last five years they have had a negative growth rate of -3.2% per year and one should at least get inflation growth out of a company like this. This gives that the motivated P/E is around 8 to 9 which means that on the stock market today it is highly overvalued by a factor 2. They do pay an acceptable dividend of 3.6% which represents around 63% of their earnings to slightly too high in my opinion.
Conclusion: HHLA is definitely not a company to invest in today. If I would have had stocks there I would probably even sell them due to the overvaluation. Sometimes when it was a very bad year it is easy that the P/E gets temporarily higher but in this case I would not say that it was like that. 2012 was by no means a good year but I would say it was acceptable. I would also think twice about being a shareholder due to the train connection with China. It can go either way but with that high P/E any bad or even so, so news carries the risk of making the stock fall deeper then what it even deserves.
I will however still keep it on my watch list due to that I want to read their quarter reports etc. to keep track of the containers leaving and arriving to Germany.
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