sell-side equity analyst benelux -...

Hans D’Haese

Sell-side equity analyst

Benelux What is the added value?

Holding & portfolio companies

Luxembourg, 14/06/16

Diversification – Risk – Return



Added value

Added value of holding & portfolio companies

3 Luxembourg, 14/06/16

Sector peculiarities

Universe. What does this sector look like?

Valuation. What is it worth?

What’s the risk?

How did it perform?

What to do?



1. Sector peculiarities

Added value of holding & portfolio companies 1

5

Sector peculiarities

Control • Economic interest leverage • Execute control with a diluted participation

Diversification • From very well diversified… • … to single-asset companies

Taxes • Exempt on capital gains • Most of dividends: no with-holding tax • Related costs to shareholdings fully tax deductible




2. What does the sector look like?


7

Universe


http://www.solvac.be/

http://www.questforgrowth.com/Dutch/index.php


8

Universe Holding company Industrial group Portfolio company Singe-asset company

control diversification investment company anchorage


http://www.solvac.be/


9

Universe Holding companies

GBL / CNP / … Sofina / Henex / … Compagnie du Bois Sauvage

• Business segments are organised within an independent firm (< > conglomerate) • Gradually shifting from controlling structure to investment company



10

Universe Diversified industrial groups

Ackermans & van Haaren Floridienne

• Financial vehicle, separate valuation of underlying businesses • Unrelated activities • Strategic view



11

Universe Portfolio companies

Luxempart Brederode Gimv Quest for Growth

• Financial point of view • Diversification • Private equity



12

Universe Single-asset companies

Financière de Tubize Heineken Holding KBC Ancora Pargesa Solvac

• Often family controlled • No diversification • Passive




3. What is it worth?


14

Valuation


ASSETS = EQUITY + LIABILITIES (Financial) Assets Equity Cash Liabilities / Debt


15

Valuation Gross Asset Value: Sum-of-the-Parts analysis with separate valuations per asset, mix of:

• DCF • sector relative multiples method • (adjusted) book value, (+ retained earnings…) • acquisition value • share price • target price • EVCA rules …



16

Valuation Net asset value models GAV: adjustment for debts, cash, cash-equivalents

• Discount • Fair value

Recommendations

• Changes in NAV forecasts • Management quality / track record / communication • Investment strategy • Valuations



17

Valuation – discount/premium • Competing private equity

• Active investment approach

• Equity stories

• NAV enhancing strategies

• Control multipliers Control vehicles – weak discounts

Improving disclosure – neutralisation of costs

Private equity investments

Active management track-record

Listed PE



18

Valuation – creating shareholder value

• Investment strategy

• Discount to reported NAV

• Spot NAV estimate

• Target NAV estimate

• Dividend yield




4. What is the risk?


20

Risk Beta < 1 Example for largest 3 Belgian • (Ackermans & van Haaren, GBL,

Sofina) • and 2 Luxembourg cies (Luxempart and Brederode)

Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data

Versus “the market”


21

Risk


Company name Listed % NAV Net cash % NAV

Ackermans & van Haaren 42% 1%

Bois Sauvage 32% -8%

Brederode 51% 1%

Financiere de Tubize 107% -7%

GBL 94% -1%

Gimv 4% 26%

Heineken Holding 100% NA

KBC Ancora 110% -10%

Luxempart 58% 12%

Quest for Growth 60% 15%

Sofina 45% 8%

Solvac 103% -3%

TINC 0% 18%

Liquidity


22 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data

Company name Largest sector exposure in % NAV Largest asset exposure in % NAV

Ackermans & van Haaren Financials 63% Delen Inv. 31%

Bois Sauvage Consumer goods 45% UBCM-Neuhaus 46%

Brederode Health Care 10% Sofina 6%

Financiere de Tubize Health Care 107% UCB 100%

GBL Basic Materials 24% Imerys 18%

Gimv Financials 15% itho daalderop 5%

Heineken Holding Consumer goods 100% Heineken 100%

KBC Ancora Financials 110% KBC Group 100%

Luxempart Financials 38% SES 17%

Quest for Growth Technology 26% Kiadis Pharma 5%

Sofina Financials 41% Danone 9%

Solvac Industrials 103% Solvay 100%

TINC Financials 82% NA NA

Risk Diversification vs. asset concentration



5. What is the return?


24

Return Economic return + gross dividend reinvested


Company name 1 year 3 years 5 years 10 years 1990-now

Ackermans & van Haaren 5% 21% 13% 9%

Bois Sauvage 9% 7% 7% 3%

Brederode 3% 16% 15% 8%

Financiere de Tubize * -2% 18% 17% 8% 13%

GBL -8% 6% 5% 2% 9%

Gimv 9% 9% 4% 5%

Heineken Holding * 19% 18% 17% 12%

KBC Ancora * -13% 25% 16% -4%

Luxempart 4% 15% 11% 11%

Quest for Growth 1% 13% 8% 4%

Sofina -1% 13% 9% 7% 10%

Solvac * -34% -8% -2% 2% 6%

TINC 2%

Holding companies (average) 3% 12% 9% 6% 9%

Single-asset companies (average) * -7% 13% 12% 4% 10%


25

Return Share price return + gross dividend reinvested


Company name 1 year 3 years 5 years 10 years 1990-now

Ackermans & van Haaren -4% 22% 14% 10% 13%

Bois Sauvage 11% 17% 13% 5% 10%

Brederode 8% 20% 17% 7% 10%

Financiere de Tubize * -2% 17% 17% 5% 13%

GBL 5% 12% 8% 3% 9%

Gimv 27% 16% 9% 8%

Heineken Holding * 19% 20% 18% 13%

KBC Ancora * -6% 30% 21% -6%

Luxempart 4% 13% 12% 10%

Quest for Growth 2% 19% 15% 5%

Sofina 18% 20% 13% 8% 11%

Solvac * -25% -2% 1% 1% 8%

TINC 4%

Holding companies (average) 8% 17% 13% 7% 11%

Single-asset companies (average) * -3% 16% 14% 3% 10%

DJ EuroSTOXX50 Return Index -13% 5% 6% 2% N.A.


26

Return Average return per annum: selection vs. the market (Europe)


3 BEL & 2 LUX


27

Return Average excess-return per annum selection vs. the market (Europe)


3 BEL & 2 LUX


28

Return Average excess-return per annum selection vs. the market (Belgium)


3 BEL & 2 LUX


29

Return


Cumulated historical share price return, gross dividend reinvested – in %

GBL

Source: Degroof Petercam, Bloomberg, Company data

Until \ In 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2006 11%

2007 -2% -12%

2008 -24% -31% -22%

2009 -12% -21% -10% 16%

2010 -13% -22% -11% 14% -1%

2011 -26% -33% -25% -3% -16% -15%

2012 -9% -18% -7% 19% 3% 4% 23%

2013 5% -5% 7% 38% 20% 21% 42% 16%

2014 16% 4% 18% 52% 31% 33% 56% 27% 10%

2015 34% 20% 36% 75% 52% 53% 80% 47% 27% 16%

2016 34% 20% 37% 76% 52% 54% 81% 47% 27% 16% 0%


30

Return



Brederode


Until \ In 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2006 22%

2007 18% -3%

2008 -29% -42% -40%

2009 -6% -23% -21% 33%

2010 5% -14% -11% 48% 12%

2011 12% -8% -5% 59% 20% 7%

2012 32% 8% 11% 87% 41% 26% 17%

2013 41% 16% 20% 100% 51% 35% 26% 7%

2014 73% 41% 46% 145% 85% 65% 54% 31% 22%

2015 99% 63% 69% 183% 113% 90% 78% 51% 41% 15%

2016 114% 76% 81% 204% 129% 105% 91% 63% 51% 24% 7%


31

Return



Luxempart


Until \ In 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2006 5%

2007 39% 33%

2008 38% 32% -1%

2009 47% 40% 6% 6%

2010 61% 53% 15% 16% 9%

2011 64% 56% 18% 19% 11% 2%

2012 81% 72% 30% 31% 23% 13% 10%

2013 97% 87% 41% 42% 34% 22% 20% 9%

2014 137% 125% 70% 71% 61% 47% 44% 31% 20%

2015 163% 150% 88% 90% 78% 63% 60% 45% 33% 11%

2016 178% 164% 99% 101% 89% 73% 69% 53% 41% 17% 6%



6. What to do?


33

To do:


GBL


Professional shareholder with focused portfolio

Why? • Portfolio mutation • Shift from yield to growth

• Increase private equity exposure

• Re-rating ongoing


34

To do:


GBL figures


Key market data

Market cap, EUR bn 12.21 Local index BEL20

Free float 46% BEL20 member Yes

Free float Mcap, EUR bn 5.64 Next AGM Apr-17

Daily avg. no. trad. sh. 12 mth 114,179 Velocity 25.9%

Daily avg. trad. vol. 12 mth, EUR m 8.3 5yr avg economic return 4.6%

Performance 5d -0.4% Divid. yld (trail. 12m) 3.8%

Performance 30d 2.5% 5yr avg hist. discount -25.0%

Performance 90d 6.7% 12m avg hist. discount -21.3%


35

To do:


GBL evolution


discount stock (EUR) NAVps (EUR)

55

60

65

70

75

80

85

Jun 15 Aug 15 Oct 15 Dec 15 Feb 16 Apr 16 Jun 16

GBL BEL20 (rebased) Pargesa (EUR - rebased)

-30%

-25%

-20%

-15%

Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16

NAV (discount)/premium 52 weeks rolling avg +/- 2 * St Dev

74

85

78

60

65

70

75

80

85

90

Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17

Target…Shaded: TP range applying 3-yr end-of-

month historical min/max discount on

30

60

90

120

150-40%

-30%

-20%

-10%

0%

07 08 09 10 11 12 13 14 15 16 17


36

To do:


Brederode


Listed: stock picking – undervalued, offering best profitability and growth Private equity: returns significantly in excess of those achievable on the stock market.

Why? • «Skin in the game» management • Excellent track-record

• Listed confort names

• Privaty equity: top funds

• Diversification


37

To do:


Brederode figures


Key market data

Market cap, EUR bn 1.13 Local index BEL20

Free float 38% BEL20 member No

Free float Mcap, EUR bn 0.43 Next AGM May-16


Daily avg. trad. vol. 12 mth, EUR m 0.2 5yr avg econ. return 14.7%


Performance 30d -3.3% 5yr avg hist. discount -30.3%

Performance 90d -1.4% 12m avg hist. discount -24.6%


38

To do:


Brederode evolution


Discount stock (EUR) NAVps (EUR)

Top-5 largest listed holdings EUR m % GAV

Sofina 83.3 5.6%

Unilever 65.4 4.4%

Nestle 53.8 3.6%

Samsung Electronics 53.5 3.6%

Novartis 53.1 3.6%

Listed assets EUR m % NAV

760.4 51.0%

-40%

-35%

-30%

-25%

-20%

-15%

Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16


32

34

36

38

40

42


Brederode BEL20 (rebased)

0

10

20

30

40

50

60-60%

-50%

-40%

-30%

-20%

-10%

0%

07 08 09 10 11 12 13 14 15 16 17


39

To do:


Luxempart the company


next…


40

To do:


Luxempart figures


Key market data

Market cap, EUR bn 0.85 Local index LuxX

Free float 35% LuxX member Yes

Free float Mcap, EUR bn 0.30 Next AGM Apr-17


Daily avg. trad. vol. 12 mth, EUR m 0.1 5yr avg econ. return 10.9%


Performance 30d -1.6% 5yr avg hist. discount -34.2%

Performance 90d 7.1% 12m avg hist. discount -36.0%


41

To do:


Luxempart evolution


discount stock (EUR) NAVps (EUR)

-45%

-40%

-35%

-30%

-25%

-20%

Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16


28

30

32

34

36

38


Luxempart BEL20 (rebased)

38.4

44.5

41.0

25

30

35

40

45

50

Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17

Target priceShaded: TP range applying 5-yr historical

min/max discount on target NAV

0

15

30

45

60-50%

-40%

-30%

-20%

-10%

07 08 09 10 11 12 13 14 15 16 17

Added value of holding & portfolio companies

42 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data

d.d. 09/06/2016 BB Close Adj. (Disc.) Avg (disc) Market Degroof Target

Company name Ticker price NAV /prem. /prem. cap. Petercam price

EUR EUR to NAV % 5Y % EUR m rating (EUR)

Ackermans & van Haaren ACKB 114.0 132.0 -13.7% -10.2% 3,817 Add 135.0

Bois Sauvage COMB 258.7 323.3 -20.0% -28.7% 435 Hold 250.0

Brederode BREB 38.5 53.0 -27.5% -30.3% 1,127 Buy 44.0

Financiere de Tubize TUB 57.1 96.4 -40.8% -40.6% 2,544 Add 66.0

GBL GBLB 75.6 93.2 -18.8% -25.0% 12,205 Hold 78.0

Gimv GIMB 52.5 46.3 13.3% -5.7% 1,335 Hold 50.0

Heineken Holding HEIO 73.1 82.5 -11.3% -13.8% 21,067 Add 77.0

KBC Ancora KBCA 35.6 47.7 -25.4% -32.2% 2,788 Hold 31.0

Luxempart LXMP 35.3 54.7 -35.5% -34.2% 846 Buy 41.0

Quest for Growth QFG 7.3 8.9 -17.4% -26.8% 111 Not rated NA

Sofina SOF 121.8 150.3 -19.0% -32.8% 4,172 Add 125.0

Solvac SOLV 94.1 129.1 -27.1% -30.8% 2,011 Not rated NA

TINC TINC 11.7 11.1 4.7% 2.1% 159 Add 11.9

Hans D’Haese

Sell-side equity analyst

Thank you


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