European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Rentokil Initial plc provides fully integrated facilities management and essential support services to government and commercial sector organisations of all sizes across all business sectors. The Company provides services in pest control, hygiene, workwear, facilities and plants.

<ul>
<li>According to The Sunday Times, Philip Jansen is reportedly planning a takeover bid for <a href="https://www.smartkarma.com/entities/rentokil-initial-plc" target="_blank" data-smartkarma-citation="entities:22125:1" rel="noopener">Rentokil Initial (RTO LN)</a>, a FTSE 100 pest control company, with private equity backing.</li>
<li>Jansen plans to boost Rentokil’s US performance and enhance its integration with Terminix, with the potential to market consolidation. Closest comparable Rollins trades at 33.7x EV/NTM EBIT vs. Rentokil's 15.7x.</li>
<li>As a global leader in pest control and hygiene services, Rentokil boasts a strong market position and brand recognition. Rentokil will report its H1 results on 25 July. Long.</li>
</ul>


According to The Sunday Times, Philip Jansen is reportedly planning a takeover bid for Rentokil Initial (RTO LN), a FTSE 100 pest control company, with private equity backing.
Jansen plans to boost Rentokil’s US performance and enhance its integration with Terminix, with the potential to market consolidation. Closest comparable Rollins trades at 33.7x EV/NTM EBIT vs. Rentokil's 15.7x.
As a global leader in pest control and hygiene services, Rentokil boasts a strong market position and brand recognition. Rentokil will report its H1 results on 25 July. Long.


SoftwareONE Holding AG provides IT services. The Company offers cloud computing, portfolio management, procurement, unified communication, and other related solutions. SoftwareONE Holding serves customers worldwide.

<ul>
<li>SoftwareONE is currently considered a special situation case by the market, with its new Board of Directors being more receptive to a potential transaction, possibly above CHF 20/share.</li>
<li>Compelling stock narrative: strong balance sheet (10.3% of market cap in net cash&amp;equivalents), low valuation (8.7x EV/NTM EBITDA, 17.5x Fwd P/E), shareholder return policy (buyback and dividend), and ongoing recovery.</li>
<li>My fair value estimate is CHF 20.04/share, which implies an undemanding 9.8x EV/Fwd NTM EBITDA. SoftwareONE releases Q2 and H1 results on 21 August. Long.</li>
</ul>


SoftwareONE is currently considered a special situation case by the market, with its new Board of Directors being more receptive to a potential transaction, possibly above CHF 20/share.
Compelling stock narrative: strong balance sheet (10.3% of market cap in net cash&amp;equivalents), low valuation (8.7x EV/NTM EBITDA, 17.5x Fwd P/E), shareholder return policy (buyback and dividend), and ongoing recovery.
My fair value estimate is CHF 20.04/share, which implies an undemanding 9.8x EV/Fwd NTM EBITDA. SoftwareONE releases Q2 and H1 results on 21 August. Long.


Grifols S.A. develops, manufactures, and markets plasma derivatives, IV Therapy, enteral nutrition, diagnostic systems, and medical materials.

<ul>
<li>
Since mid-June, share-price spreads have generally tightened across our European liquid universe of ordinary and preferred shares (13 have tightened, 5 widened, 1 remained at same level).</li>
<li>Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols (see section on the company), Media-for-Europe, Sixt.</li>
<li>Recommended trades long ordinary / short preferred shares: Henkel, SSAB Svenska Stal.</li>
</ul>



Since mid-June, share-price spreads have generally tightened across our European liquid universe of ordinary and preferred shares (13 have tightened, 5 widened, 1 remained at same level).
Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols (see section on the company), Media-for-Europe, Sixt.
Recommended trades long ordinary / short preferred shares: Henkel, SSAB Svenska Stal.


Liquid Universe of European Ordinary and Preferred Shares: July‘24 Report

Puig Brands SA designs and manufactures luxury lifestyle products. The Company offers beauty, fragrance, and fashion products. Puig Brands serves customers worldwide.

<ul>
<li>The Technical Advisory Committee (CAT) in an extraordinary meeting adds <a href="https://www.smartkarma.com/entities/puig-brands-sa" target="_blank" data-smartkarma-citation="entities:42395:1" rel="noopener">Puig Brands (PUIG SM)</a> to the IBEX 35 index and removes <a href="https://www.smartkarma.com/entities/melia-hotels-international-sa" target="_blank" data-smartkarma-citation="entities:21283:1" rel="noopener">Melia Hotels International Sa (MEL SM)</a>.</li>
<li>Although Puig Brands has only been publicly traded since 3 May, its market value exceeds €14.5 billion and its trading volume makes it deserving of a spot in the IBEX.</li>
<li>Puig Brands is expected to see at least a 50% increase in trading volume by July 22, potentially adding four to eight additional days of trading volume.</li>
</ul>


The Technical Advisory Committee (CAT) in an extraordinary meeting adds Puig Brands (PUIG SM) to the IBEX 35 index and removes Melia Hotels International Sa (MEL SM).
Although Puig Brands has only been publicly traded since 3 May, its market value exceeds €14.5 billion and its trading volume makes it deserving of a spot in the IBEX.
Puig Brands is expected to see at least a 50% increase in trading volume by July 22, potentially adding four to eight additional days of trading volume.


Industrivarden AB is an investment company.  The Company's holdings consists of a portfolio of listed Nordic industrial companies.

<ul>
<li>As of end of H1, NAV was SEK 156 billion (SEK 361/share). NAV increased by 4%, gains in portfolio compensated by leverage increase. 5-y total return of 78.6% (OMX30, 76.4%).</li>
<li>Industrivärden C shares are trading at a 4.8% discount to NAV (vs. 8.3% average for last 5-years). It seems risky to bet on a further discount reduction, rather a reversal.</li>
<li>My target NAV is SEK 176,893 million. My TP for the C shares of Industrivärden, assuming a 5% discount to NAV, is SEK 360.3 (4.6% upside).</li>
</ul>


As of end of H1, NAV was SEK 156 billion (SEK 361/share). NAV increased by 4%, gains in portfolio compensated by leverage increase. 5-y total return of 78.6% (OMX30, 76.4%).
Industrivärden C shares are trading at a 4.8% discount to NAV (vs. 8.3% average for last 5-years). It seems risky to bet on a further discount reduction, rather a reversal.
My target NAV is SEK 176,893 million. My TP for the C shares of Industrivärden, assuming a 5% discount to NAV, is SEK 360.3 (4.6% upside).


Industrivärden: H1 Results, NAV Evolution and Discount

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.