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PARGESA HOLDING SA-BR
PARGESA HOLDING SA-BR
Less downwards pressure to be expected on the share price
18 Jul 16
During 2015, the euro’s depreciation against the Swiss franc was not the only factor impacting the stock price downwards. As we noted (see our Latest dated 07/08/2015), one of the historical key partners of Pargesa, BNP Paribas, issued exchangeable bonds for Pargesa Holding SA bearer shares. Issued respectively in 2012 and 2013 with an interest rate of 0.25% and admitted to trading on the Euro MTF market in Luxemburg, these bonds were due to mature respectively in 2015 and 2016. Last year, the exchanges led, in all likelihood, to the subscribers selling the received shares in exchange on the market. At 31/12/2014, BNP Paribas still held 11.15% of Pargesa. We have estimated that the bonds could enable BNP Paribas to divest 9% globally. The bank’s position was 6.1% at the end of 2015 (and 3.3% of voting rights). 7% of Pargesa’s capital was consequently sold during the year. Some outstanding bonds may not yet have been exchanged or reimbursed and could lead to further sales of Pargesa shares during 2016. Pargesa noted in its 2015 Annual Report that 2.6% of the voting rights were “__conferred on exchange rights__”. This means that these exchange rights relate primarily to bonds issued in March 2013 by BNP Paribas, maturing in 2016 and exchangeable for Pargesa Holding SA bearer shares. We do not have any information on the situation to date. But the impact might not be as great as in 2015.
Not so graceful last steps to BNP exit
07 Aug 15
The H1 15 consolidated net income amounted to CHF399m (compared with CHF378m in H1 14), including the following items: 1) Pargesa’s share of the partial reversal of the impairment previously recorded by the subsidiary GBL on its holding in Lafarge (CHF221m), 2) Pargesa’s share of the capital gain generated from GBL’s sale of 0.1% of Total (CHF34m), 3) the net gain resulting from the delivery by GBL of Suez Environnement shares to bondholders who exercised their exchange rights early (CHF14m), and 4) the impact of the euro’s depreciation against the Swiss franc since the beginning of the year (an average €/CHF exchange rate of 1.06 in H1 15 compared with 1.22 in H1 14, i.e. a yoy decline of 13.6%), since most income derives from GBL’s contribution which is denominated in euros. Pargesa’s accounts recorded and will record over the year 2015 the transactions carried out by GBL (for more details, see our Latest dated 05/08/2015 on GBL): • The deconsolidation as associate of Lafarge in the group’s accounts, as a consequence of the success of the tender of the Lafarge shares to the public exchange offer launched by Holcim for the purpose of building in July 2015 the merged group LafargeHolcim, in which GBL would hold 9.43% of the share capital; • the dilution of GBL’s shareholding from 56.5% at 31/12/2014 to 53.2% in Imerys share capital, the acquisition by Imerys of the Greek group S&B being partly paid in shares; • the forward sales concluded by GBL on 10.3m shares of Total (0.4% of the share capital) at an average spot price of €48.17 per share, leading to a capital gain of about CHF130m Pargesa’s share; • the further implementation of GBL’s diversification strategy through the development of “Incubator”-type investments, with the stakes acquired in Umicore (13.1%), Ontex (7.4%) and now Adidas (about 3%); • within GBL’s “Financial Pillar”, Sienna Capital and Ergon Capital Partners funds continued to invest in a certain number of companies and disposed of their stakes in other companies, generating capital gains. An amount of CHF12m will be recorded by Pargesa in Q3 15. On the financial side, Pargesa Holding SA issued a CHF150m Swiss domestic bond in order to increase its financial resources and partially fund the redemption of its 2.5% bond of CHF150m maturing in November 2016. Issued in March 2015, the new bond pays an annual coupon of 0.875%, is redeemable in April 2024 and significantly increased Pargesa’s average debt maturity. Concerning the company's organisation, the Vice Chairman of the Board of Directors and Executive Director Albert Frère did not seek another term as Director (see our Latest dated 03/02/2015) and his son Gérald Frère replaced him as Executive Director, following the Annual General Meeting held in May 2015.
Positive returns from all asset classes in Q316
28 Nov 16
Tetragon Financial Group (TFG) reported fair value earnings of US$49.7m for the third quarter of 2016, with positive contributions made by all asset classes. NAV total return was 1.3% for the quarter and 7.8% for the nine months to 30 September 2016. Having completed a US$100m tender offer in June 2016, TFG commenced a US$50m tender offer on 9 November 2016, which should be meaningfully accretive to NAV per share given the current wide share price discount to NAV. Consistent with previous years, the third interim dividend was held in line with the second interim, confirming TFG’s 5.9% yield.
N+1 Singer - Morning Song 30-11-2016
30 Nov 16
Sanderson has delivered full year results in line with expectations and the 19 October trading update after a strong finish to the year compensated for a slower start. A healthy level of pre-contracted recurring revenue (50%), incremental sales to existing customers and new customer wins at higher average order values helped deliver solid revenue growth in both the Digital Retail (+9%) and Enterprise (+12%) divisions. A decent order book and good sales momentum suggest that the company is on track to deliver on unchanged profit expectations for the current year. We continue to view the valuation (FY17 EV/EBITDA 8.6x) as undemanding given an attractive combination of accelerating growth potential, strong cash generation and growing dividends.
Small Cap Breakfast
28 Nov 16
Warpaint London—Schedule one update. Raising £2.5m at 97p. Expected mkt cap £62.6m vs revenues of £22.3m Walls & Futures REIT — Has raised £1m at £1 to acquire, refurbish or develop residential properties in the UK . Due to arrive on ISDX on 29 November Diversified Oil & Gas— Schedule One now out. $60m to be raised. Expected admission 6 December. Creo Medical Group —UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.
Long-term investment in Asian small caps
10 Nov 16
Scottish Oriental Smaller Companies Trust (SST) aims to generate long-term capital growth by investing in a portfolio of small-cap Asia ex-Japan equities. Vinay Agarwal is the interim lead fund manager while Wee-Li Hee is on maternity leave; he is assisted by Martin Lau, Scott McNab and the broader First State Stewart Asia team. Stocks are selected on a bottom-up basis, with a view to preserving capital on the downside as well as achieving capital growth. SST has significantly outperformed the peers and the MSCI AC Asia ex-Japan and MSCI AC Asia ex-Japan Small Cap indices over both five and 10 years.
Interims reveal value creation
28 Nov 16
In June Draper Esprit was listed on the LSE. Today its maiden interim results reveal substantial progress since IPO. In addition to strengthening the executive team with the appointment of Ben Wilkinson as CFO, Draper Esprit has created shareholder value through new investment and realisations.