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Bucephalus Research Partnership (BRP) is an independent research firm staffed by accountants.  We focus on exposing creative accounting.  Our thematic research investigates accounting concepts, exposes the methods used to mislead investors and helps refine the algorithms we use to hunt for ideas. Our global industry trend research puts today's numbers in perspective.  Our single-stock research is based on commercial investment ideas where we believe there is a significant gap between a company's published accounts, its business reality and the market's valuation.

 

Regulatory Information

  • Regulatory Status: Type 4: Advising on Securities

Bucephalus Research
  • Bucephalus Research
EUR 435.12
WSM Williams-Sonoma...
DNLM Dunelm Group pl... ... (+4)

Global home product stores

Ten years accounting and valuation data to put today’s numbers into perspective. After the financial crisis, revenue growth recovered quite quickly and has compounded at 5+% in North America and Japan. Even Europe has seen continuous positive growth. However, growth rates look fairly paltry when compare to Amazon and we worry than rising valuation multiples, and particularly tangible asset multiples, seem to be ignoring the potential for on-line cannibalisation.

WSM WILLIAMS-SONOMA INC.
DNLM DUNELM GROUP PLC
9843 NITORI HOLDINGS CO. LTD.
BBBY BED BATH & BEYOND INC.
02/07/18 February 7, 2018 36 EN
Bucephalus Research
  • Bucephalus Research
EUR 435.12
CO Casino Guichar...
WOW Woolworths Grou... ... (+10)

Global food and drug stores

Ten years accounting and valuation data to put today’s numbers into perspective. Revenue growth at food and drug retail companies has slowed to single digits around the world. Moreover, over- investment means asset turns have fallen. Despite this, asset valuations are up even though on-line sales are likely to increase and depress margins. Europe and Asia look particularly vulnerable.

CO CASINO GUICHARD-PERRACHON SA
WOW WOOLWORTHS GROUP LTD
KR KROGER CO.
CVS CVS HEALTH CORPORATION
TSCON TESCO PLC
COLR ETABLISSEMENTEN FRANZ COLRUYT N.V.
ATD.B ALIMENTATION COUCHE-TARD INC. CLASS B
2651 LAWSON INC.
06808 SUN ART RETAIL GROUP LIMITED
8028 FAMILYMART CO. LTD.
02/07/18 February 7, 2018 40 EN
Bucephalus Research
  • Bucephalus Research
EUR 435.12
PSMT PriceSmart Inc...
FIVE Five Below Inc... ... (+8)

Global department stores

Ten years accounting and valuation data to put today’s numbers into perspective. Over the decade, nearly all countries have seen revenue growth trend to low single digits and margins decline. Unfortunately, in many cases capex continues to exceed depreciation. Either operating costs are being capitalised or they are under-depreciating. Either way, growing the balance sheet means leverage is rising, either on or off balance sheet, and underlying investment returns are suffering.

PSMT PRICESMART INC.
FIVE FIVE BELOW INC.
EPR EUROPRIS ASA
500251 TRENT LTD.
03308 GOLDEN EAGLE RETAIL GROUP LIMITED
DBHSF DEBENHAMS PLC
8905 AEON MALL CO. LTD.
3086 J. FRONT RETAILING CO. LTD.
02/07/18 February 7, 2018 40 EN
Bucephalus Research
  • Bucephalus Research
EUR 435.12

Global Clothing retail

Ten years accounting and valuation data to put today’s numbers into perspective. Clothing retail remains a cash generative profitable business. However, in most of the world, margins continue to decline and inventories are rising. Modest productivity gains are helping but are nowhere near enough to compensate of valuation increases in Asia. North America looks cheap but, adjust balance sheets for leases, and asset turns are no better while leverage is much higher than elsewhere.

02/07/18 February 7, 2018 37 EN
Bucephalus Research
  • Bucephalus Research
EUR 1740.46
TKA THYSSENKRUPP AG

thyssenkrupp (TKA GR): heading for a re-cap

thyssenkrupp came to our attention following our reports on pensions and debt manipulation. Digging deeper, we noted that, for all the talk of portfolio optimisation, thyssenkrupp is always booking impairment charges and provisions. We think profits and asset values overstated. Add in some strange financing arrangements and cash generation remains very poor. Finally, it looks as if it is about to breach its banking covenants. There is little, if any, justification for thyssenkrupp’s US$1...

12/19/17 December 19, 2017 20 EN
Bucephalus Research
  • Bucephalus Research
EUR 435.12
WSM Williams-Sonoma...
DNLM Dunelm Group pl... ... (+4)

Global home product stores

Ten years accounting and valuation data to put today’s numbers into perspective. After the financial crisis, revenue growth recovered quite quickly and has compounded at 5+% in North America and Japan. Even Europe has seen continuous positive growth. However, growth rates look fairly paltry when compare to Amazon and we worry than rising valuation multiples, and particularly tangible asset multiples, seem to be ignoring the potential for on-line cannibalisation.

WSM WILLIAMS-SONOMA INC.
DNLM DUNELM GROUP PLC
9843 NITORI HOLDINGS CO. LTD.
BBBY BED BATH & BEYOND INC.
02/07/18 February 7, 2018 36 EN
Bucephalus Research
  • Bucephalus Research
EUR 435.12
CO Casino Guichar...
WOW Woolworths Grou... ... (+10)

Global food and drug stores

Ten years accounting and valuation data to put today’s numbers into perspective. Revenue growth at food and drug retail companies has slowed to single digits around the world. Moreover, over- investment means asset turns have fallen. Despite this, asset valuations are up even though on-line sales are likely to increase and depress margins. Europe and Asia look particularly vulnerable.

CO CASINO GUICHARD-PERRACHON SA
WOW WOOLWORTHS GROUP LTD
KR KROGER CO.
CVS CVS HEALTH CORPORATION
TSCON TESCO PLC
COLR ETABLISSEMENTEN FRANZ COLRUYT N.V.
ATD.B ALIMENTATION COUCHE-TARD INC. CLASS B
2651 LAWSON INC.
06808 SUN ART RETAIL GROUP LIMITED
8028 FAMILYMART CO. LTD.
02/07/18 February 7, 2018 40 EN
Bucephalus Research
  • Bucephalus Research
EUR 435.12
PSMT PriceSmart Inc...
FIVE Five Below Inc... ... (+8)

Global department stores

Ten years accounting and valuation data to put today’s numbers into perspective. Over the decade, nearly all countries have seen revenue growth trend to low single digits and margins decline. Unfortunately, in many cases capex continues to exceed depreciation. Either operating costs are being capitalised or they are under-depreciating. Either way, growing the balance sheet means leverage is rising, either on or off balance sheet, and underlying investment returns are suffering.

PSMT PRICESMART INC.
FIVE FIVE BELOW INC.
EPR EUROPRIS ASA
500251 TRENT LTD.
03308 GOLDEN EAGLE RETAIL GROUP LIMITED
DBHSF DEBENHAMS PLC
8905 AEON MALL CO. LTD.
3086 J. FRONT RETAILING CO. LTD.
02/07/18 February 7, 2018 40 EN
Bucephalus Research
  • Bucephalus Research
EUR 435.12

Global Clothing retail

Ten years accounting and valuation data to put today’s numbers into perspective. Clothing retail remains a cash generative profitable business. However, in most of the world, margins continue to decline and inventories are rising. Modest productivity gains are helping but are nowhere near enough to compensate of valuation increases in Asia. North America looks cheap but, adjust balance sheets for leases, and asset turns are no better while leverage is much higher than elsewhere.

02/07/18 February 7, 2018 37 EN
Bucephalus Research
  • Bucephalus Research
EUR 435.12

Global Auto-manufacturers

Ten years accounting and valuation data puts today’s numbers and trends into perspective. In 2007, the industry was in dire straits, today while revenues are up, asset turns and valuations are lower. Vendor financing is supporting sales in developed markets and leverage remains high. If interest rates rise or second hand car values fall, the automobile industry will face problems. Only China is reliably turning revenues into cash flow. India is an anomaly, with negative cash flow and hug...

12/14/17 December 14, 2017 36 EN

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