Speedy thesis works as a starting point for investment research: presenting potential opportunities and helping readers to select companies and stocks fitting into their own (dividend investment) strategy and portfolio.
I will send out the Speedy thesis #6 covering only one company. It seeems the one in question has got wind under its wings, and sometimes there’s no time to ponder.
A | Relais - distribution of spare parts and vehicle service. Dividend yield 3%, paid semi-annually.
A | Relais ($RELAIS) 🇫🇮
🔑 Low relative and absolute valuation, serial acquirer, consolidator, anti-cyclicality
Relais is a Finnish holding company operating in vehicle aftermarket spareparts wholesale (67%) and vehicle service (33%) segments primarily in the Nordic countries. It was listed on Helsinki Stock Exchange in October 2019 at a price of 7,4 euros per share.
Relais is heavily engaged in acquisition pursuing to consolidate the industry. The company markets itself as a compounder. For sure, Relais has many characteristics for the title but it can be hazardous to engage in too much promotion among investors.
Thesis 💡
According to stock analysis firm Inderes Relais’ share trades at approximately 40% discount to other Nordic compounders.
Relais has poorer profitability level than Swedish compounders in average.
Compared to the industry peers the discount is approximately 10%.
Adjusted multiples are historically low.
Fragmented industry in which there’s a lot of potential for acquisitions.
In 2021 the company had a difficult H1. Now, the company raised its dividend above expectations which could imply that the management has confidence in the near future.
Cons
The Finnish economy is doing poorly and Swedish economy can be impaired by the downturn in the housing and construction sector. The company has quite a lot of debt. Olli-Pekka Kallasvuo is in the board of directors (one of the main characters behind the demise of Nokia mobile phones).
In its commissioned research Nordea says:
Assuming that Relais can deliver revenue growth and an operating profit margin in line with our expectations, we estimate a fair value range of EUR 16.1-19.7.
My own estimations say that the stock is currently fairly valued between 11.5-12.5 euros. If Relais manages to return to the “normal” profitability level, there’s a lot of upside.
I have recently covered plenty of auto related stocks. I don’t even like cars in any particular way. Please check earlier posts for ideas on Standard Motor Products, Advance Autoparts and Autoliv. A few weeks ago I also wrote a Seeking Alpha post on Eastern Company, EML 0.00%↑ but the best buy opportunity quickly faded away. Eastern is a small cap holding company owning several manufacturing businesses focusing on vehicle parts and related products.
On Seeking Alpha I published and overview of the LY results of tower company IHS Holding. After a nearly 100% rally from October bottom, there’s could be some upside left. IHS 0.00%↑
My twitter handles
🇬🇧 English: @paidwait
🇫🇮 Finnish: @anttisleinonen