European champion in technical textile
​Sioen is a Belgian family-owned business (65% of shares are family-held), which has a number one or two market position in various European technical textile end markets, which are expected to deliver GDP-plus growth. We expect the company to deliver 9% EPS growth (2016-18e CAGR), driven by 6% sales growth (including 3% organic growth), 11% EBITDA growth driven by operating leverage effect, cost control and a positive mix-effect and 7% EBIT growth inhibited by higher depreciation due to a renewed capex cycle. Sioen is on the look-out for acquisitions, for which we expect the company to have up to €100m of M&A firepower, which would allow it to add up to €115m of sales (30% of 2017e sales). We used a DCF model to calculate Sioen’s €30/share fair equity value, which implies a 2017e P/E of 17.8x and EV/EBITDA of 9.1x. The stock’s rerating is in motion since 2013, with an average premium to peers of 40% from that point, while it is now trading at a 27% premium. Our target multiple implies a 50% premium, which is justified, in our view, by Sioen’s strong ROCE performance since 2015 (in absolute and in sector-relative terms) and not yet reflected in the share price. Our ROCE/WACC valuation analysis suggests that the market has only just priced in Sioen’s 2015 ROCE performance, with upside to €35/share by 2018e, further strengthening our investment case.
Sioen Industries. Sioen Industries NV is a Belgium-based company with a portfolio of products and activities, such as spinning, weaving and coating, manufacturing of garments, production of chemicals and processing of technical textiles. The Company has three divisions: the Coating division, engaged in the production of a number of technical textiles, coated with various polymers and marketed in different markets; The Apparel division, engaged in the production of technical protective clothing active in a number of sectors, such as industry, leisure wear and specialized markets, as well as the Chemicals division engaged in the processing of basic raw materials into technical semi-finished products, such as pigment pastes, decorative inks, varnishes and inks for digital printing for a number of markets. It operates through Ursuit Group and Verseidag Ballistic Protection OY, UV Curable systems BVBA, James Dewhurst Group and Verseidag Ballistic Protection Oy.
Merodis Equity Research offers bespoke equity research backed by our extensive experience in equity markets at top-tier investment banks in London, Paris and Brussels serving institutional investors worldwide. Analysts at Merodis Equity Research have achieved #1 Extel rankings in the past for Benelux equity research.
Please note that we may have been mandated by the company to produce the research report (clearly indicated on the front page of the report), but that (1) our fees are not linked at all to our opinions and views, and (2) that we refund the company with the proceeds from the sale of our research as to remain 100% independent. This is an innovative business model, which we hope will contribute to improving the visibility towards worldwide investors of small & mid caps that deserve wider market attention and ownership.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.