Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

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<a href="https://www.smartkarma.com/entities/stylam-industries-ltd" target="_blank" data-smartkarma-citation="entities:13492:1" rel="noopener">Stylam Industries (SYIL IN)</a> is a play on the Indian laminate space with a 25% CAGR growth predicated on growth in both international and domestic markets.</li>
<li>The stock trades at 23.6x/19x FY24e/25e. While this is not cheap by any stretch of the imagination, the company is a high grower/best in class amongst its competitors. </li>
<li>
<a href="https://www.smartkarma.com/entities/stylam-industries-ltd" target="_blank" data-smartkarma-citation="entities:13492:1" rel="noopener">Stylam Industries (SYIL IN)</a>  is completing an expansion to increase capacity by 40% in FY24 and expanding in a new segment that can double its revenue over FY23-25e. </li>
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Stylam Industries (SYIL IN) is a play on the Indian laminate space with a 25% CAGR growth predicated on growth in both international and domestic markets.
The stock trades at 23.6x/19x FY24e/25e. While this is not cheap by any stretch of the imagination, the company is a high grower/best in class amongst its competitors. 

Stylam Industries (SYIL IN)  is completing an expansion to increase capacity by 40% in FY24 and expanding in a new segment that can double its revenue over FY23-25e. 


Stylam (SYIL IN): Laminate Growth Play In India with 25% CAGR Growth

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Singapore Press, Tabcorp, Invesco Office, Justbon, IHH Healthcare, JD.com

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<p>On 23 April, Société Investissement Deconinck and <a href="https://www.smartkarma.com/entities/wendel-sa" target="_blank" data-smartkarma-citation="entities:21503:1" rel="noopener">Wendel SA (MF FP)</a> offered to acquire a 49.1% stake in <a href="https://www.smartkarma.com/entities/tarkett-sa" target="_blank" data-smartkarma-citation="entities:21562:1" rel="noopener">Tarkett SA (TKTT FP)</a> for €20 per share, cum dividend (approximately €640 mn). Wendel will be able to hold up to 30% of Tarkett at the end of this transaction.</p>
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<li>This represents 0.6x EV/21e Revenue, 6.7x EV/21e EBITDA and 23.7x P/21e E (source: Capital IQ consensus).</li>
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<p data-bind="visible: !isCollapsed(), html: content">The bidders already hold 50.68% of the capital, and the Deconinck family will tender an additional 0.6%. There are no conditions attached to the offer, other than recommendation from the Supervisory Board.</p>
<p data-bind="visible: !isCollapsed(), html: content">The bidders intend to <em>squeeze out and delist</em> Tarkett if they obtain <em>acceptances over 90%</em>. It should be noted that because the offer is taking place according to the simplified procedure, it will not be reopened after the final result is published.</p>
<p data-bind="visible: !isCollapsed(), html: content">Comparables are trading at 12.1x EV/Fwd EBITDA vs. 6.5x for Tarkett, which suggests  there may be rich rewards from restructuring the business. However, there is execution risk.</p>
<p>As the rationale says, "the reinforcement of the family’s control and the contribution of Wendel, a renowned long-term family investor will enable Tarkett to pursue its ongoing transformation and to seize new opportunities".</p>
<p>By using DCF on conservative assumptions (EBITDA figures from Capital IQ consensus, WACC of 9%, 5x EBITDA exit multiple, PV of terminal value equal to €1,262 mn), I estimate a fair value of <strong>€21.18/share</strong>.</p>
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<p>This is in line with comparable companies implied Fwd P/E valuation of €21.28/share.</p>
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<p>Median Capital IQ consensus TP is €20/share (7 analysts cover Tarkett).</p>
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<p><em>There could be a sweetened offer</em>, and the market seems to think so, as the shares have traded at or slightly above the offer price since announcement. Also traded volume has been above the daily average since the offer announcement.</p>
<p>At current prices €20-20.10, I recommend <strong>Long TKTT, TP €21.28</strong> (6.1% upside) as the risk/reward seems favourable.</p>
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On 23 April, Société Investissement Deconinck and Wendel SA (MF FP) offered to acquire a 49.1% stake in Tarkett SA (TKTT FP) for €20 per share, cum dividend (approximately €640 mn). Wendel will be able to hold up to 30% of Tarkett at the end of this transaction.

This represents 0.6x EV/21e Revenue, 6.7x EV/21e EBITDA and 23.7x P/21e E (source: Capital IQ consensus).










The bidders already hold 50.68% of the capital, and the Deconinck family will tender an additional 0.6%. There are no conditions attached to the offer, other than recommendation from the Supervisory Board.
The bidders intend to squeeze out and delist Tarkett if they obtain acceptances over 90%. It should be noted that because the offer is taking place according to the simplified procedure, it will not be reopened after the final result is published.
Comparables are trading at 12.1x EV/Fwd EBITDA vs. 6.5x for Tarkett, which suggests  there may be rich rewards from restructuring the business. However, there is execution risk.
As the rationale says, "the reinforcement of the family’s control and the contribution of Wendel, a renowned long-term family investor will enable Tarkett to pursue its ongoing transformation and to seize new opportunities".
By using DCF on conservative assumptions (EBITDA figures from Capital IQ consensus, WACC of 9%, 5x EBITDA exit multiple, PV of terminal value equal to €1,262 mn), I estimate a fair value of €21.18/share.



This is in line with comparable companies implied Fwd P/E valuation of €21.28/share.


Median Capital IQ consensus TP is €20/share (7 analysts cover Tarkett).


There could be a sweetened offer, and the market seems to think so, as the shares have traded at or slightly above the offer price since announcement. Also traded volume has been above the daily average since the offer announcement.
At current prices €20-20.10, I recommend Long TKTT, TP €21.28 (6.1% upside) as the risk/reward seems favourable.














  

Wendel & Deconinck/Tarkett: Take Private Deal, Possibility of a Sweetened Offer

Co-founder & Managing Director, Marketnomix 

Rajan Govil

Co-founder & Managing Director

Marketnomix 

Macroeconomics

<p>Industrial Production (IPI) in the Eurozone revived in April 2016 after having recorded negligible growth in March 2016. On a seasonally and working day adjusted (swda) basis, production grew by 2% y-o-y in April 2016 compared to a rise of 0.1% y-o-y in March 2016. It grew 1.1% y-o-y on a 3-month moving average (3mma) basis in April 2016 compared to 1.6% y-o-y in March 2016.</p><p>In terms of industry segments, electricity &amp; utilities increased 1.8% y-o-y in April 2016 after having recorded negative…</p>

Industrial Production (IPI) in the Eurozone revived in April 2016 after having recorded negligible growth in March 2016. On a seasonally and working day adjusted (swda) basis, production grew by 2% y-o-y in April 2016 compared to a rise of 0.1% y-o-y in March 2016. It grew 1.1% y-o-y on a 3-month moving average (3mma) basis in April 2016 compared to 1.6% y-o-y in March 2016.In terms of industry segments, electricity &amp; utilities increased 1.8% y-o-y in April 2016 after having recorded negative…

Eurozone: Industrial Production Revives Across Most Sectors and Countries in April

<p>Industrial Production growth in the Eurozone came in lower than expected in March 2016. On a  seasonally and working day adjusted basis, production slowed to 0.2% y-o-y in March 2016 compared to a 1.1% y-o-y increase in February 2016. It grew 1.6% y-o-y on a 3-month moving average basis in March compared to 1.7% y-o-y in February.</p><p>In terms of industry segments, chemicals &amp; basic pharmaceutical production saw a decline of around 5.5% y-o-y in March compared to an increase of 0.4% y-o-y in…</p>

Industrial Production growth in the Eurozone came in lower than expected in March 2016. On a  seasonally and working day adjusted basis, production slowed to 0.2% y-o-y in March 2016 compared to a 1.1% y-o-y increase in February 2016. It grew 1.6% y-o-y on a 3-month moving average basis in March compared to 1.7% y-o-y in February.In terms of industry segments, chemicals &amp; basic pharmaceutical production saw a decline of around 5.5% y-o-y in March compared to an increase of 0.4% y-o-y in…

Eurozone: March Industrial Production Lower than Expected

France

Tarkett SA manufactures and distributes building products. The Company offers a wide range of flooring solutions such as vinyl, laminate, wood, carpet rolls and tiles, linoleum, artificial turf, and accessories.

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Tarkett SA (TKTT FP)

Stylam (SYIL IN): Laminate Growth Play In India with 25% CAGR Growth

Stylam is a high-growth (25% CAGR) player in the laminate industry. This piece highlights its competitive edge and why it's a good long-term...

Sameer Taneja

Last Week in Event SPACE: Singapore Press, Tabcorp, Invesco Office, Justbon, IHH Healthcare, JD.com

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Wendel & Deconinck/Tarkett: Take Private Deal, Possibility of a Sweetened Offer

There could be a sweetened offer, and the market seems to think so. At current share prices of €20-20.10, I recommend Long TKTT, TP €21.28 (6.1%...

Jesus Rodriguez Aguilar

Eurozone: Industrial Production Revives Across Most Sectors and Countries in April

Industrial Production (IPI) in the Eurozone revived in April 2016 after having recorded negligible growth in March 2016. On a seasonally and...

Rajan Govil

Eurozone: March Industrial Production Lower than Expected

Industrial Production growth in the Eurozone came in lower than expected in March 2016. On a seasonally and working day adjusted basis, production...

Rajan Govil

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