Report
Guy Sips ...
  • Jacob Mekhael
  • Kristof Samoy
  • Lynn Hautekeete
  • Michiel Declercq
  • Sharad Kumar S.P
  • Thibault Leneeuw
  • Thomas Couvreur
  • Thomas Vranken
  • Wim Hoste
  • Wim Lewi

Dynamic Top Pick List Update July 2024: Fagron & Xior in; Alfen & Shurgard out

We anticipate a continued cautious stock market over 2H24 as expectations for steep and fast interest rate cuts by central banks have proven premature as inflation remains relatively sticky, especially in the US. Also corporate profit growth in Europe slows and the French elections have cast a negative spell. The strong US consumer also has run out of cheap financing and stimulus. The upcoming elections in the US could divide the biggest economy into extreme stances and political uproar. The lingering conflict in Israel adds to the uncertainty as it could expand into important oil exporting countries and result in energy cost inflation. Economic growth forecasts for Benelux and the Eurozone are edging down. We still expect a mild economic slow-down in Europe and Benelux over the next 12-18 months as it takes a while before lower interest rates impact the economy. Overall a relative defense stance in the portfolio is warranted.


In this July update, we did some changes to our Dynamic Top Pick List: Fagron & Xior in; Alfen & Shurgard out.

- Fagron is a strong cash generating company globally active within the growing market of pharmaceutical compounding. We include Fagron in our Dynamic Top Pick List as we expect Fagron to grow organically at a high-single digit rate in the next five years, while EBITDA margins could reach the low 20s within the next 18 months.

- We also include Xior (again) in our Dynamic Top Pick List after the recent Contribution in Kind (CiK) agreement to acquire two PBSA assets in Lisbon and Kraków. Together for a total of 670 units/1,053 beds and an average gross investment yield of 8.41%. These acquisitions are realised entirely by CiK against the issue of new shares at an issue price of € 29.02. The total contribution value is approx. € 80m, which strengthens Xior's equity and reduces the LTV by 1,1%. We like this CiK deal as it combines growth with LTV reduction.

- We remove Alfen from our Dynamic Top Pick List after the recent profit warning, the financing situation and the site visit to Alfen. In the short term Alfen needs to get a waiver for their RCF, as long as that hasn't materialised, we expect limited upside. Additionally, we lowered recently our estimates, due to the slowdown and increased costs.
- We also remove Shurgard from our Dynamic Top Pick List to replace it by Xior as we see more short term potential in the latter one. As a natural consolidator in an undersupplied market, Shurgard's growth potential is nevertheless still present. The market is currently anticipating an equity placement and this weighs on the share price. Once this deal is done and the acquisition is closed, we will consider taking Shurgard back in our selection.

After these changes we continue our Dynamic Top Pick List with a 44/56 cyclical/defensive selection with a focus on value stocks that have been left behind. Defensive segment like Holdings are overweight. However, in the Benelux we have a selection of cyclical industrials at cheap valuations that have often underperformed the market. We favour Benelux value stocks as even a mild recession typically hits growth stocks proportionally harder. We notice that some stocks have been hit hard by minor set-backs. These could be more relatively more resilient over FY24 as investors look for left behind stocks.
Underlyings
ABN AMRO Bank NV Depositary receipts

ABN Amro Bank NV is a bank based in the Netherlands. The Bank provides various financial products and services across a variety of channels, including its Mobile Banking app and Internet Banking. The Bank's product portfolio includes insurances, mortgages, savings, investments, loans and payments, among others. The Bank serves retail, private and corporate clients worldwide.

Ackermans & van Haaren NV

Ackermans & Van Haaren is an investment company. Co. operates in five sectors: Marine Engineering & Infrastructure, which includes DEME NV, a dredging and marine company; Private Banking, which includes BDM NV - Continentale Verzekeringen NV (ASCO NV), which focuses on marine and industrial insurance via brokers; Real Estate, Leisure & Senior Care, which includes Extensa Group NV, a real estate developer; Energy & Resources, which includes Telemond Group, a supplier to the crane and automotive industry; and Development Capital, which is engaged in ICT and engineering, retail and distribution, real estate development, and media and printing.

Alfen NV

Alfen NV (Alfen) is a company based in the Netherlands, engaged in the design, development and production of electric grid equipment. The Company is active in three business lines: Smart Grids, which supplies standardized electricity grid connection systems, secondary transformer substations, local power grids, devices for grid automation, as well as software and back-end systems for remote management and grid control; Energy Storage, responsible for development and installation of modular energy storage systems under the brand TheBattery, which are used by utilities, grid operators, energy traders and industrial companies, among others, and Electric Vehicle (EV) Charging, which supplies EV charge points in a variety of capacities and functionalities for use at home, work and in public areas. In addition, Alfen offers service, management and maintenance activities, including remote support and monitoring, as well as an in-house technological know-how center.

ArGEN-X SE

Argenx N.V. is a clinical-stage biotechnology company developing a deep pipeline of differentiated antibody-based therapies for the treatment of severe autoimmune diseases and cancer. Utilizing its suite of differentiated technologies, Co. is focused on developing product candidates with the potential to be either first-in-class against novel targets or best-in-class against known, but complex, targets in order to treat diseases with a significant unmet medical need.

Bekaert SA

Bekaert is a global technological and market company engaged in advanced solutions based in steel wire transformation and coatings as well as an independent manufacturer of drawn steel wire products. In addition, Co. teams up with customers and suppliers globally to develop, implement, upgrade, and protect both current and future technologies. Co.'s business activities are put in practice along two main axes: Product Innovation and Process Innovation. Product Innovation helps Co. better serve its customers, while Process innovation enables Co. to increase operational effectiveness, minimizing its impact on the environment.

Care Property Invest SA

Care Property Invest NV. Care Property Invest NV, formerly Serviceflats Invest NV, is a Belgium-based real estate investment company that builds and finances housing for pensioners. The Company specializes in premises equipped with technologies ensuring safety and comfort of elderly people. In addition, Care Property Invest designs, builds, supervises the progress of a number of construction works, monitors the budget and finances projects in the long term. Care Property Invest NV cooperates mainly for public health care center in Antwerp -Openbaar Centrum voor Maatschappelijk Welziijn (OCMW), including Berchem. The Company focuses its activities on the Belgian market. It operates through a number of subsidiaries, such as Ter Bleuk NV, Siger SA and Konli BVBA and VSP Wolvertem bvba.

D'Ieteren SA

D'Ieteren is engaged in two sectors of services to the motorist: Automobile Distribution, which is a distributor of Volkswagen, Audi, Seat, Skoda, Bentley, Lamborghini, Bugatti, Porsche, and Yamaha brands in Belgium; and Vehicle Glass, which is engaged in the repair and replacement of vehicle glass mainly in Europe, North and South America, Australia and New Zealand through Belron s.a. and notably its CARGLASS®, AUTOGLASS® and SAFELITE® AUTO GLASS brands.

EVS Broadcast Equipment SA

EVS Broadcasting Equipment is engaged in the development and marketing of audiovisual equipment relating to the processing of pictures and sound. Co. provides solutions based on tapeless workflows with a consistent modular architecture. Co.'s activities are divided into the following regions: Asia-Pacific, Europe, Middle East and Africa, and America.

Fagron SA

Fagron supplies products, services to professionals and institutions in the healthcare sector in Europe, the U.S.A. and Brazil. Co.'s activities are subdivided into four divisions. Through Fagron, Co. offers products and concepts for pharmaceutical compounding. Through Arseus Dental, Co. supplies dental products and concepts to dentists and dental laboratories in Belgium, the Netherlands, France, Germany and Switzerland. Through Arseus Medical, Co. supplies medical and surgical products to specialists, elderly homes, homecare nurses and hospitals in Belgium and the Netherlands. Through Corilus, Co. supplies ICT total solutions for medical specialists in Belgium, the Netherlands and France.

FUGRO NV

Heineken NV

Heineken is an international brewer and engaged in the production and distribution of beer brands in 178 countries. Co. is committed to the marketing and consumption of its more than 250 international premium, regional, local and specialty beers and ciders. These include Heineken®, Amstel, Anchor, Biere Larue, Bintang, Birra Moretti, Cruzcampo, Desperados, Dos Equis, Foster's, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Strongbow, Tecate, Tiger and Zywiec. In addition, Co. is the cider maker with brands such as Strongbow® and Bulmer's®. Some of its wholesalers also distribute wine, spirits and soft drinks.

Ion Beam Applications SA

IBA- Ion Beam Applications develops and markets technologies and pharmaceutical products for the healthcare sector, with a focus on cancer diagnosis and therapy. Co. is also engaged in the sterilization and ionization market. Co. operates in two primary business segments: Equipment and Pharmaceuticals. Co.'s Equipment segment encompasses development, fabrication, and services associated with medical and industrial particle accelerators, proton therapy systems, and a range of dosimetry products, while Co.'s Pharmaceuticals segment encompasses the production and distribution of radiopharmaceutical agents as well as its bioassay operations.

SHURGARD SELF STORAGE LIMITED

Sofina SA

SOFINA is an investment company whose portfolio consists of shareholdings in various companies. Co. manages a portfolio of long-term and short-term investments. Its portfolio comprises investments in companies which are active in sectors such as: Energy and Services (GDF Suez, Suez Environnement, bioMerieux and Exmar); Retail (Colruyt, Delhaize); Consumer goods (Danone, Rapala, B & W Group, and Chapoutier); Satellite operators (SES); Finance Companies (Eurazeo, Caledonia, Luxempart, RAB Capital); Industry (Petit Forestier, Landis + Gyr, Carbone Lorraine and Deceuninck) and Alternative assets (Private equity, Hedge funds).

Solvay SA

Solvay is engaged in chemical and plastic businesses worldwide. Co. offers chemical products such as advanced materials, barium strontium, calcium chloride, caustic soda, chlorinated products, fluor, peroxygen products, polyglycerols, precipitated calcium carbonate, soda ash, and sodium bicarbonate. It also provides specialty polymers, such as Spire ultra polymers, Solviva biomaterials, and sulfone polymers. Co. structures its activities around five operating segments: Advanced Formulations, Advanced Materials, Performance Chemicals, Functional Polymers and Corporate & Business Services, each with its own specific business model and each comprised of Global Business Units (GBUs).

TINC Comm. VA

TINC Comm VA. Tinc Comm VA, also known as TINC, is a Belgium-based company focusing on investments in Infrastructure Asset Companies holding capitalintensive Infrastructure Assets providing services and generating cash flows of a long term sustainable nature. The Initial Investment Portfolio of the Company includes investments in over 10 Infrastructure Asset Companies holding underlying Infrastructure Assets in public private partnerships (PPP), energy and real assets in Belgium and the Netherlands, including Strorm and Brabo 1, among others. It operates through Storm Holding 4 NV.

Van De Velde S.A.

Van de Velde creates, produces and sells luxury women's lingerie under its own brand names. Co.'s brands are Marie Jo – 'Haute Lingerie' which provides timeless underwear fashion for the woman in all her forms; Marie Jo L'Aventure – 'Lingerie Pure' which provides Graphic luxury lingerie for the young-at-heart woman; and PrimaDonna – 'Exigez l'excellence' which provides luxury lingerie that combines a fit with fashion. Co. operates in a single reporting business segment, which is the production and sale of luxury lingerie. Co. reports its opeStefaan Vandammerations based on the geographical location of customers divided into euro zone and non euro zone.

Xior Student Housing N.V.

Xior Student Housing NV is a Belgium-based company active in the field of residential Real Estate. The Company's offer is mainly for students and it includes several types of rooms for rent, including a student house in Leiden.

Provider
KBC Securities
KBC Securities

We are a financial services provider for several types of professional clients, each with distinct needs.

 

Analysts
Guy Sips

Jacob Mekhael

Kristof Samoy

Lynn Hautekeete

Michiel Declercq

Sharad Kumar S.P

Thibault Leneeuw

Thomas Couvreur

Thomas Vranken

Wim Hoste

Wim Lewi

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