Change of valuation profile

We had initiated coverage of Chargeurs as a holding company then battling on to pay back its debt,. However, the strategy pursued by the new owner since 2015 and its moves into new capital-light businesses, with a B2B service-focused dimension, have had us reassess our view of Chargeurs to now as an industrial group.

From this publication onwards, Chargeurs is classified as an industrial company, under the Support Services sector. Previously, it was regarded as a holding company.

The strategy of Chargeurs, since its owner and manager Michaël Fribourg assumed control in 2015, has been a very hands-on one, combining a keen search of growth in global but niche markets and a low capital intensity.

Although we initially saw Chargeurs through the lens of an industrial conglomerate/holding company-type, given the strong delegation of daily execution to its different business units, the moves into new capital-light businesses by spinning off growth bits of existing businesses into fully-fledged divisions (Healthcare Solutions and Museum Solutions) led us to reassess this view.

We now believe that Chargeurs’ unique profile and current growth dynamic are better reflected by tying it to the Support Services sector, consisting of a highly diversified universe of businesses catering for various B2B services underlined by a low capital intensity focus.

The valuation procedures are changed by booking Chargeurs as an industrial company rather than a holding company. The weight of a NAV-based valuation is cut from 55% to 20% of the various valuation metrics. An EV/EBITDA-based valuation pops up with a weight of 20%, while the DCF is given a weight of 35% vs. 5% originally.

By applying the new peers belonging to the Support Services area or assimilated as a business model and changing the weights of the valuation methods as required by the newly-adopted industrial profile valuation, the target price remains essentially unchanged (from €34.9 to €35.1). The DCF and NAV remain calculated exactly as they were previously, only weightings and peers change. It is clear that, over time, this will no longer be the case

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