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 put up just a few sections of the write-up and solely those that ship me an electronic mail will obtain the total model (free of charge after all).. The rationale for that is that I’m actually how lots of the readers are actally studying the total doc. The bonus tune after all is included on this put up on the finish.
0. Funding meme
For some unusual motive, I felt the urge to begin 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 technology by the Jensen household which nonetheless controls 40% of the shares.
The corporate manufactures and sells globally and is using some structural tailwinds, most notable power/useful resource effectivity and automation.
After a Covid pushed droop in gross sales, 2023 revenues and earnings have surpassed pre-Covid ranges by a major quantity and 2024 appears like one other double digit progress 12 months (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 worth is near ATH (and the inventory is up +30% over 1 12 months), the valuation may be very low with a P/E of round 10x for 2024 (and nearly no debt).
Though there is no such thing as a “laborious” catalyst, I do assume that the inventory is a doubtlessly very engaging funding at present worth ranges for the affected person enterprise centered investor.
- Introduction:
I had put Jensen Group on my watch record throughout my “all Belgian Shares” collection in April and now its time to essentially 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 presently led by Jesper Munch Jensen in third technology. The corporate has a really good historical past page. In a nutshell, the corporate really began as a dairy restore store however then moved into laundry know-how 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 clear up ?
Jensen is a equipment manufacturing firm that gives options for “heavy obligation” wet-laundry functions. On their web site they provide an excellent overview of their utility areas:
So Motels, 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 problem within the laundry business as properly.
One must kind 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 guide work concerned which appears to turn into an increasing number of troublesome to fill.
What Jensen Group provides are kind of totally automated options for many of the heavy obligation laundry course of that may run 24/7 with a really diminished requirement of guide labour.
In case you wish to study extra, Jensen has a number of good Youtube movies displaying totally different merchandise and laundry factories. I discover these Movies fairly stress-free after a tough day 😉
Compared to most opponents, Jensen can construct a big “laundry manufacturing facility” utterly and wherever on the earth resulting from their international 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 progress (Maxi Press is included on this)however nonetheless this appears spectacular. Particularly the numerous order consumption appears to point that additional progress may be on the horizon.
Traditionally, Jensen has grown EPS by 11% over 20 years. Within the final 5 years, together with the Covid interval, progress accelerated to ~15% p.a.
Gross sales progress has been considerably decrease and appears like this (till 2023)
This hole is defined by a major 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 sensible progress price for Jenesen going ahead. It’s also clear that the final 2 or 3 years are usually not consultant with respect to high line progress.
Then again, as talked about earlier than, there are some sturdy elementary tailwinds for Jensen. As well as, there’s additionally an excellent likelihood to promote larger worth elements (Robotics, Software program) and rising the share of Providers is a transparent technique, supported by the acquisition of Maxi Press.
Personally, I believe an natural EPS progress price in a spread of 5-10% shouldn’t be completely unrealistic for the following 2-5 years.
One attention-grabbing facet with regard to quick time period progress can also be the actual fact, that the large business truthful TEXCare, which normally takes place very 4 years occurred in November 2024. Apparently, the TEXCare 2020 didn’t occur resulting from 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 wanting ahead what Jensen will say after they report 2024 quantity s in early March.
It must be seen how Money conversion appears in a extra “regular” 12 months like 2024. if we assume a 80% conversion, then primarily based on ~50 mn EBIT for 2024, FCF can be~ 40 mn EUR and(together with Maxipress buy worth) 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 further return from a a number of enlargement.
As Jensen pays out solely a relative small portion of that money in Dividends plus some share purchase backs, the large query after all is how they are going to allocate money going ahead. In my view, they’ve allotted capital very properly up to now and I see no motive why this could change anytime quickly.
There are additionally not a number of comparable firms that I can consider, actually circuitously. From my present universe, I’d assume Krones and 2G Vitality may be the closest ones that I can consider. Each promote globally, assemble relativ complicated machines and don’t promote to vehicle 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 also be an attention-grabbing firm that I wish to look deeper, identical as 2G. Nonetheless, in 2G’s case, a number of progress appears to be priced in.
10. Conclusion & Abstract:
As talked about at first, it took a while earlier than my enthusiasm grew for the corporate. I had regarded on the firm already just a few instances till I received actually . Nonetheless, the extra I researched and examine them, the higher I preferred the corporate and the enterprise.
On the backside line, one will get a decently managed firm that has respectable progress 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 also be an excellent 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 is no such thing as a laborious catalyst, the following related date might be starting of March when Jensen then experiences 2024 numbers. will probably be particularly attention-grabbing 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 Music: “Soiled Deeds” from ACDC:
https://www.youtube.com/watch?v=whQQpwwvSh4
