Disclaimer: This isn’t funding recommendation. PLEASE DO YOUR OWN RESEARCH !!!!!
As talked about within the Efficiency assessment, I had already construct up a brand new place in late 2024 in a brand new inventory. This time I’ll strive one thing new: I’ll solely submit just a few sections of the write-up and solely those that ship me an e-mail will obtain the total model (totally free in fact).. The rationale for that is that I’m actually how lots of the readers are actally studying the total doc. The bonus track in fact is included on this submit on the finish.
0. Funding meme
For some unusual motive, I felt the urge to start out the pitch with this reasonably “German humor” meme:
- Elevator pitch:
Jensen-Group, an organization initially from Denmark, now listed in Belgium, is a 420 mn EUR market cap “hidden champion” that’s the world market chief in “Heavy laundry” tools and automation. The corporate is run in third era by the Jensen household which nonetheless controls 40% of the shares.
The corporate manufactures and sells globally and is driving some structural tailwinds, most notable vitality/useful resource effectivity and automation.
After a Covid pushed stoop in gross sales, 2023 revenues and earnings have surpassed pre-Covid ranges by a big quantity and 2024 appears to be like like one other double digit development yr (gross sales +10%, EBIT +20% 9M 2024).
The corporate now achieves stable double digit EBIT margins (11,4% EBIT margin YTD) and a ROCE >20%. Though the inventory value is near ATH (and the inventory is up +30% over 1 yr), the valuation could be very low with a P/E of round 10x for 2024 (and virtually no debt).
Though there isn’t a “onerous” catalyst, I do assume that the inventory is a doubtlessly very engaging funding at present value ranges for the affected person enterprise centered investor.
- Introduction:
I had put Jensen Group on my watch list during my “all Belgian Shares” series in April and now its time to actually comply with on. That is what I had written again then:
- The corporate
3.1. Historical past
Jensen was based in 1937 in Denmark and is at present led by Jesper Munch Jensen in third era. The corporate has a very nice history page. In a nutshell, the corporate truly began as a dairy restore store however then moved into laundry expertise and thru acquisitions and personal developments grew to become a number one provider of huge scale laundry options.
3.2. KPI overview
3.3. What Drawback does Jensen Group resolve ?
Jensen is a equipment manufacturing firm that provides options for “heavy obligation” wet-laundry functions. On their web site they provide a great overview of their utility areas:
So Accommodations, Hospitals. Cruise Ships are all heavy customers of “heavy obligation laundry”. Regardless of the standard of the laundry course of itself, employees scarcity appears to be an enormous concern within the laundry business as properly.
One must type the soiled laundry, deal with it and ultimately dry and fold it and never combine laundry items throughout batches. Previously, to my understanding, there was a excessive degree of handbook work concerned which appears to change into increasingly more tough to fill.
What Jensen Group presents are roughly absolutely automated options for many of the heavy obligation laundry course of that may run 24/7 with a really decreased requirement of handbook labour.
In case you need to be taught extra, Jensen has a lot of nice Youtube videos displaying completely different merchandise and laundry factories. I discover these Movies fairly enjoyable after a tough day 😉
Compared to most opponents, Jensen can construct a big “laundry manufacturing unit” fully and anyplace on the earth because of their world presence.
6. Valuation / Anticipated return
Within the first 9 months of 2024, Jensen reported fairly spectacular numbers:
EBIT margins have additional elevated from 10% in 2023 to 11,5%.
Sadly, they don’t get away natural development (Maxi Press is included on this)however nonetheless this appears to be like spectacular. Particularly the numerous order consumption appears to point that additional development is likely to be on the horizon.
Traditionally, Jensen has grown EPS by 11% over 20 years. Within the final 5 years, together with the Covid interval, development accelerated to ~15% p.a.
Gross sales development has been considerably decrease and appears like this (till 2023)
This hole is defined by a big enhance in profitability particularly on the backside line from 0,6% in 2003 to 7,8% in 2023.
So the problem right here is clearly to provide you with a practical development charge for Jenesen going ahead. It’s also clear that the final 2 or 3 years are usually not consultant with respect to prime line development.
However, as talked about earlier than, there are some sturdy basic tailwinds for Jensen. As well as, there may be additionally a great likelihood to promote larger worth parts (Robotics, Software program) and rising the share of Providers is a transparent technique, supported by the acquisition of Maxi Press.
Personally, I feel an natural EPS development charge in a spread of 5-10% is just not completely unrealistic for the subsequent 2-5 years.
One fascinating side with regard to quick time period development can be the very fact, that the massive business truthful TEXCare, which normally takes place very 4 years occurred in November 2024. Apparently, the TEXCare 2020 didn’t occur because of Covid so this was the primary large truthful after 8 years. I learn a number of feedback that the business was VERY proud of orders at teh fare. I’m actually trying ahead what Jensen will say once they report 2024 quantity s in early March.
It must be seen how Money conversion appears to be like in a extra “regular” yr like 2024. if we assume a 80% conversion, then based mostly on ~50 mn EBIT for 2024, FCF could be~ 40 mn EUR and(together with Maxipress buy value) someplace between 7-9% present FCF/EV yield.
That in flip would end in a return expectation in a spread of 12-19% p.a. plus any extra return from a a number of growth.
As Jensen pays out solely a relative small portion of that money in Dividends plus some share purchase backs, the massive query in fact is how they are going to allocate money going ahead. In my view, they’ve allotted capital very properly previously and I see no motive why this could change anytime quickly.
There are additionally not lots of comparable firms that I can consider, actually indirectly. From my present universe, I might assume Krones and 2G Vitality is likely to be the closest ones that I can consider. Each promote globally, assemble relativ advanced machines and don’t promote to car producers.
Here’s a small comp sheet:
We are able to see that Krones, the bigger German producer of bottling machines is equally valued, 2G a lot larger. Krones as such can be an fascinating firm that I need to look deeper, identical as 2G. Nevertheless, in 2G’s case, lots of development appears to be priced in.
10. Conclusion & Abstract:
As talked about to start with, it took a while earlier than my enthusiasm grew for the corporate. I had seemed on the firm already just a few occasions till I received actually . Nevertheless, the extra I researched and examine them, the higher I appreciated the corporate and the enterprise.
On the backside line, one will get a decently managed firm that has respectable development and margins at a really respectable valuation. In the event that they handle to proceed to develop, not solely EPS might develop however sooner or later in time, right here can be a great likelihood to get a (considerably) larger valuation a number of.
In any case, I began a 4% place at round 42 EUR per share already in December 2024.
As there isn’t a onerous catalyst, the subsequent related date shall be starting of March when Jensen then studies 2024 numbers. will probably be particularly fascinating to see if orders have considerably elevated after the TEXCare truthful in November. If enterprise additional accelerates, I’d enhance the place to a full place.
Annex: Bonus Tune: “Soiled Deeds” from ACDC:
https://www.youtube.com/watch?v=whQQpwwvSh4