La Doria is
an Italian listed company and is a leading producer of tomato-based products,
pulses-vegetables, ready-made sauces and fruit juices. With its more than 60
years of history, La Doria is the number one producer of peeled and chopped
tomatoes in Italy and number one for private label canned tomatoes in the UK. Biggest
clients are, amongst others, Tesco, Sainsbury’s, Lidl, Carrefour, Coop and
Walmart.
La Doria is currently boosting its production
capacity, especially for ready-made sauces and cans, but also for tomatoes and
pulses. This expansion plan will have total costs of approx. €125 million in
the years from 2018 to 2021. It is estimated that after this investment
program, CAPEX will be reduced significantly which will lead to an even
stronger free cash flow generation.
The
founding family (Ferraioli) still holds around 63% of the shares, with the
remainder being free float.
Valuation
Back in
2011, revenue stood at €484 million with an EBITDA of €31 million. Fast forward
to 2018, these numbers have increased to €688 million and almost €53 million,
respectively. This equals to a CAGR of 5.1% in terms of revenue and 7.9% for
EBITDA.
Over many
years, La Doria has been a steady machine – and there is little reason to think
this should change anytime soon. Expecting similar net profits for 2019 as in
the previous years (around €30 million), the P/E of 9-10x is fairly attractive.
On top of that, the P/B stands at 1.1x, which is not expensive either. Due to
the investment program, net debt has increased to roughly €135 million as of Q3
2019 yet does not seem to be worrisome at all.
What’s
next?
La Doria
has shown an excellent track record over decades and will enter into harvesting
phase with the completion of the current ongoing expansion plan. The steady and
predictable results, its strong market position and the solid balance sheet
speak for the company. By using comparable multiples and the potential increase
in its dividend after the investment plan, a stock price higher than €15 per share should
be feasible with limited risk.
Current
Price
€8.86 per share
