Disclaimer: This isn’t funding recommendation. PLEASE DO YOUR OWN RESEARCH !!!!!
As talked about within the Efficiency overview, I had already construct up a brand new place in late 2024 in a brand new inventory. This time I’ll attempt one thing new: I’ll solely put up a couple of sections of the write-up and solely those that ship me an e mail will obtain the total model (without spending a dime after all).. The rationale for that is that I’m actually how lots of the readers are actally studying the total doc. The bonus track after all is included on this put up on the finish.
0. Funding meme
For some unusual cause, I felt the urge to start out the pitch with this slightly “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 driving some structural tailwinds, most notable vitality/useful resource effectivity and automation.
After a Covid pushed hunch in gross sales, 2023 revenues and earnings have surpassed pre-Covid ranges by a big quantity and 2024 appears to be like like one other double digit development 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 virtually no debt).
Though there is no such thing as a “onerous” catalyst, I do assume that the inventory is a probably very engaging funding at present worth ranges for the affected person enterprise targeted investor.
- Introduction:
I had put Jensen Group on my watch checklist throughout my “all Belgian Shares” sequence 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 truly began as a dairy restore store however then moved into laundry know-how and thru acquisitions and personal developments turned a number one provider of enormous scale laundry options.
3.2. KPI overview
3.3. What Drawback does Jensen Group resolve ?
Jensen is a equipment manufacturing firm that gives options for “heavy obligation” wet-laundry functions. On their web site they offer a superb overview of their software areas:
So Inns, 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 concern within the laundry business as nicely.
One must type 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 grow to be increasingly tough to fill.
What Jensen Group provides are roughly absolutely 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 need to study extra, Jensen has numerous good Youtube movies exhibiting totally different merchandise and laundry factories. I discover these Movies fairly enjoyable after a tough day 😉
Compared to most rivals, Jensen can construct a big “laundry manufacturing facility” fully and wherever on this planet 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 development (Maxi Press is included on this)however nonetheless this appears to be like spectacular. Particularly the numerous order consumption appears to point that additional development could be on the horizon.
Traditionally, Jensen has grown EPS by 11% over 20 years. Within the final 5 years, together with the Covid interval, development accelerated to ~15% p.a.
Gross sales development has been considerably decrease and appears like this (till 2023)
This hole is defined by way of a big improve 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 practical development price for Jenesen going ahead. It is usually clear that the final 2 or 3 years are usually not consultant with respect to high line development.
Then again, as talked about earlier than, there are some robust basic tailwinds for Jensen. As well as, there’s additionally a superb likelihood to promote greater worth parts (Robotics, Software program) and growing the share of Providers is a transparent technique, supported by the acquisition of Maxi Press.
Personally, I feel an natural EPS development price in a variety of 5-10% will not be completely unrealistic for the following 2-5 years.
One attention-grabbing facet with regard to brief time period development can be the actual fact, that the massive business truthful TEXCare, which normally takes place very 4 years occurred in November 2024. Curiously, the TEXCare 2020 didn’t occur resulting from Covid so this was the primary huge truthful after 8 years. I learn a number of feedback that the business was VERY pleased with orders at teh fare. I’m actually trying ahead what Jensen will say after they report 2024 quantity s in early March.
It must be seen how Money conversion appears to be like in a extra “regular” 12 months like 2024. if we assume a 80% conversion, then primarily based on ~50 mn EBIT for 2024, FCF could be~ 40 mn EUR and(together with Maxipress buy worth) someplace between 7-9% present FCF/EV yield.
That in flip would lead to a return expectation in a variety of 12-19% p.a. plus any further return from a a number of growth.
As Jensen pays out solely a relative small portion of that money in Dividends plus some share purchase backs, the massive query after all is how they’ll allocate money going ahead. In my view, they’ve allotted capital very nicely previously and I see no cause why this could change anytime quickly.
There are additionally not numerous comparable corporations that I can consider, definitely in a roundabout way. From my present universe, I might assume Krones and 2G Vitality could be the closest ones that I can consider. Each promote globally, assemble relativ complicated machines and don’t promote to car producers.
Here’s a small comp sheet:
We will see that Krones, the bigger German producer of bottling machines is equally valued, 2G a lot greater. Krones as such can be an attention-grabbing firm that I need to look deeper, similar as 2G. Nevertheless, in 2G’s case, numerous development appears to be priced in.
10. Conclusion & Abstract:
As talked about to start with, it took a while earlier than my enthusiasm grew for the corporate. I had appeared on the firm already a couple of instances till I bought actually . Nevertheless, the extra I researched and examine them, the higher I appreciated the corporate and the enterprise.
On the backside line, one will get a decently managed firm that has first rate development and margins at a really first rate 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 be a superb likelihood to get a (considerably) greater 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 onerous catalyst, the following related date might be starting of March when Jensen then stories 2024 numbers. it will likely be particularly attention-grabbing to see if orders have considerably elevated after the TEXCare truthful in November. If enterprise additional accelerates, I would improve the place to a full place.
Annex: Bonus Track: “Soiled Deeds” from ACDC:
https://www.youtube.com/watch?v=whQQpwwvSh4
