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Although the NAV declined slightly during the quarter (-0.7%), Wendel made strong progress in its new strategic directions, actively rotating its portfolio and adding a new dimension to third-party asset management with the signature of an agreement to purchase IK Partners. While the widening in the discount to the NAV and the recent share price performance suggest otherwise, the 51% discount to NAV as of September 2023 is compelling.
Companies: Wendel (MF:EPA)Wendel SE (MF:PAR)
AlphaValue
Wendel had a modest quarter on the NAV front (down 0.7% qoq and 3.5% YTD) despite a slightly-better operational performance (+5.7% organic growth yoy over 9m). With the portfolio rotation under way and the desire to establish itself as a player in third-party asset management, it is clear that Wendel is determined to live up to its promises. That said, the widening NAV discount and the share price are saying otherwise: investors are not on board.
Wendel confirmed the speculation surrounding its possible acquisition of IK Partners. The terms have been given: Wendel intends to acquire IK Partners, a company managing €11.8bn AuM, in two steps for an enterprise value of around €751m, i.e. 12.5x the fee-related earnings target of 2024. Through this transaction, Wendel intends to diversify its sources of income with recurring flows, and gain a foothold in the world of third-party asset management.
The strategic turnaround unveiled by Laurent Mignon last March does not seem to have won over investors, with the Wendel share price down by 17% YTD. It has to be said that Wendel’s conversion to third-party appears behind schedule, as the private equity golden age is a distant reality. On Friday, Bloomberg reported that Wendel is negotiating the acquisition of the private equity firm IK Partners. Although this move makes sense from a strategic standpoint, investors are unlikely to be particular
Wendel posted lacklustre H1 23 results, marked by a 3.6% contraction in its NAV qoq and a 2.9% drop in the companies’ contributions to net income. Notwithstanding these shaky results, Wendel deserves credit for delivering on its strategic objectives set in March, with an active rotation of its portfolio. Indeed, Wendel has announced that it has acquired 82% of the French leader in digital transformation consultancy, Scalian, and is in the process of selling the flexible packaging manufacturer, C
Wendel seems determined to deliver on its strategic objectives. The family holding company has announced that it has completed the acquisition of 82% of the French leader in digital transformation consultancy, Scalian, and is in the process of selling the flexible packaging manufacturer, Constantia Flexibles. Although the group’s strategic reorientation is well under way, the results remain shaky, with NAV down 3.6% in Q2 and net income from operations down 1.9% yoy.
Wendel is poised to deliver on its strategic objectives announced last March. The beginning of the year is shaping up well for the HoldCo, which has recorded a 2.8% growth in NAV and sound operating performance of its portfolio companies, Constantia Flexibles, CPI, and BV. The exclusive negotiations to acquire Scalian, a leading engineering consultant in France, kicks off the HoldCo’s new roadmap, which is becoming more growth-oriented.
Laurent Mignon has marked his territory by making a major strategic shift in the family holding company through plans to develop the third-party management activity, notwithstanding Wendel’s apparent reluctance to include outside investors. While the HoldCo posted solid 2022 figures thanks to the good performance of its portfolio companies, the capital gains from the sale of Cromology and the increase in NAV over Q4, we remain sceptical as to the change in strategy in an unfavourable context for
Yesterday, Wendel held its 21st investor day, marking the handover from André François-Poncet to Laurent Mignon at the helm of the group. During the day, Wendel reaffirmed its leading position in several sectors and its resilience in a particularly challenging environment. No statement was given regarding the strategy of the group under the new CEO, but Laurent Mignon presents himself as a change impeller rather than a continuator.
Wendel reported a good Q3 22 from an operational point of view, with growth in consolidated revenues of 21%, including 12% organic growth to €2.3bn. The same cannot be said in terms of NAV with a 4.5% decline in Q3 bringing the YTD decline to 16%. Nevertheless, while Wendel’s NAV may be in a worrying downtrend, the increasing discount of the stock to the NAV of as of September 2022 (c.51%) is definitely worth snapping up.
Although the H1 2022 NAV performance was not particularly upbeat (down 10.4% YTD) due to the market turmoil, the beginning of the year looks to have been quite good for Wendel in terms of revenues and operating margins with top-line growth across all portfolio companies.
Companies: Wendel SE (MF:PAR)Wendel SE (0HZD:LON)
The unexpected departure of André François-Poncet by the end of the year (originally planned for 2025) raises some questions about Wendel’s future. Despite the sudden announcement, the group’s keeness to entrust the reins to a new CEO who is more of a partner than a reformer gives us hope for Wendel to continue its momentum.
Although the Q1 NAV performance was weak (-12% versus the December 2021 level), driven by the decline in the Bureau Veritas share price (-10% qoq), Wendel has posted strong top-line growth across all consolidated companies since the start of the year. With a strong liquidity position and relatively low net debt, the HoldCo is well positioned to contend with the current macroeconomic and geopolitical uncertainties and seize potential investment opportunities.
Wendel released a strong set of 2021 results with all of the portfolio companies contributing positively to the top line and group operating result. The HoldCo should be well equipped to face external shocks from the volatile geopolitical environment and its ripple effects on the global economy. With the net debt position improving significantly following the completion of the Cromology disposal, Wendel’s solid financial standing and resilient operating outlook are at odds by a widening discount
Although the Q3 NAV performance was not particularly upbeat (2.4% decline), this was mostly related to the poor reception to the long awaited IHS IPO; looking at the unlisted subsidiaries and solid revenue growth shown in Q3, placing them above their pre-pandemic levels, bode well for potential valuation upgrades at the year-end and support a positive NAV progression.
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