Massimo
Zanetti is a world leader in the production, processing and marketing of
roasted coffee, distributed in around 110 countries. The company, headquartered
in Italy, operates 18 facilities across Europe, Asia and the Americas, and has a
global network of around 400 coffee shops in 50 countries. Massimo Zanetti has
been a consolidator of its market and is purchasing constantly smaller
competitors, as was the case in 2018 with the acquisition of the Australian
brand ‘The Bean Alliance’ for around €21 million and Nutricafés S.A. as well as
Segafredo Zanetti Worldwide Italia S.p.A in 2016 for €44 million.
The
chairman and CEO, Massimo Zanetti, indirectly still holds ~68% of the company
following its IPO in 2015.
Valuation
In sum,
Massimo Zanetti generates around €900 million in revenues per year. Historical
net profits were in the area of €15 to 20 million, which is, compared to its
current market capitalization of €203 million, a P/E of approx. 12x.
As of Q3
2019, the P/B stands at only 0.62x. Although the acquisitions have led to a
higher amount of intangibles/goodwill and debt, leverage still looks alright.
Or, looking at it from a different perspective, yearly EBITDA amounts to around
€71 million while net debt is estimated to be €195 million in 2019.
The yearly dividend
of €0.19 per share (€6.5 million in total; a dividend yield of 3.2%) leaves room
for improvement and may be increased as was already the case last year.
What’s
next?
While there
is certainly no rush, it seems like that through the IPO, a bigger change in
the company structure may happen in the coming years – a transition from a
family run and controlled company to a ‘real’ listed company with higher trading liquidity. Until such a
potential transition will be completed, shareholders are buying a decently
valued company whose price is depressed by the low trading volume and dominant
role of the chairman’s family.
Current
Price
€5.92 per
share
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