Adjusting our FY2020 expectations on COVID-19 impact (Chargeurs)
Adjusting our FY2020 expectations on COVID-19 impactTARGET CHANGE
CHANGE IN TARGET PRICE€ 26.1 vs 29.9 -12.8%
The cut to our target price reflects the more challenging outlook brought by the COVID-19 outbreak, which is nonetheless mitigated by the quick-witted initiatives taken by management, such as the launch of a new business line focused on the development and production of personal protective equipment, as well as the continued acquired growth strategy.
CHANGE IN EPS2020 : € 0.81 vs 1.28 -36.9%
2021 : € 1.44 vs 1.61 -10.6%
The lower FY19 EPS reflect the costs related to the ambitious acquired growth strategy pursued by Chargeurs. These non-recurring expenses weigh on the bottom line but underline the group's commitment to reach €1bn in consolidated revenues. On the EBIT front, the FY19 numbers reflect the challenging operating context, particularly for the Protective Films division, as well as the increased investments in the PCC Fashion Technologies division related to the new production facility that came online in H2.
We have cut our FY20 EPS on the back of the sizeable impact that the COVID-19 pandemic is expected to have on Chargeurs' activities. We forecast a 15% sales cut from the 2019 levels, to be partly off-set by the launch of the PPE business under the 'Lainière Santé' banner, in addition to €15m in additional revenues from the continued acquired growth strategy.
CHANGE IN NAV€ 26.6 vs 31.1 -14.6%
Our estimated NAV remains quite conservative, as it assigns no value to the future acquired businesses while factoring in a (partial) purchase cost. The NAV is mainly affected due to the changes in the valuation of the different divisions, after taking into account the FY19 results and our FY20 outlook. We maintain our EV-multiple assumptions but lower our EBIT and EBITDA expectations, accounting for the COVID-19 impact.
CHANGE IN DCF€ 33.8 vs 40.2 -15.9%
We maintain our base assumption which allows for a €100m capital increase, as well as our out-year sales and EBITDA growth rates. The cut to our DCF stems from: 1/ the decreased earnings expected in FY2020 due to the impact from the COVID-19 pandemic, in addition to our slightly more cautious scenario for FY2021, and 2/ the increased number of shares for the capital increase (from 4m to 5m) due to a lower expected issue price.
Chargeurs SA is a France-based company, which provides customizable specialty material solutions. The Company and its subsidiaries operate in four sectors: Protective Films, Fashion Technologies, Museum Solutions and Luxury Materials. Protective Films designs, produces and markets technical solutions to protect the quality of steel, aluminum, plastic or other surfaces during the transformation process, as well as film application machines. Fashion Technologies produces and markets linings for clothing. Museum Solutions includes the industrial divisions Senfa, specialized in the functionalization of technical textiles, and Chargeurs Creative Collection, specialized in the provision of services to cultural institutions. Luxury Materials manufactures and markets combed wool ribbons. The Company is active globally.
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