(ABM FN) D’Ieteren, which embodies the history of the Belgian car industry, has outperformed all its relatives at the Brussels stock exchange this year. The result is a share price that has more than doubled to EUR 163.80. The question on everyone’s lips right now: what can we expect for 2022?
Although D’Ieteren is historically known as the importer of Volkswagen cars into Belgium, the holding’s stock market performance is mainly, if not exclusively, thanks to its subsidiary Belron for glass and bodywork activities, which owns 50.01 percent in has hands.
Analysts have long said that the valuation of this goldcrest has not been priced in sufficiently by the market. This came through last year when US funds bought 16.80 percent of Belron’s shares in the summer, at a price that valued the entire company at about $17 billion, much higher than insiders had estimated.
In its half-year results, D’Ieteren reported an adjusted consolidated result growth of no less than 183.1 percent. Belron alone registered a growth of 135.8 percent, while the D’Ieteren Automotive division saw profits rise by 115.4 percent.
Even the financially troubled subsidiary Moleskine saw its loss fall to 3.9 million euros in the first half of this year.
D’Ieteren is also positive for the year as a whole. In its half-year results, the holding company announced that it expects to see its adjusted consolidated pre-tax profit increase by at least 45 percent from the €333 million recorded in 2020.
Analysts’ consensus is also positive, with expected profits of around EUR 500 million, according to figures published before the half-year results.
Belron’s succes
The success of the parent company of Carglass can be explained by the widespread use of driver assistance systems. These include radars, sensors, cameras and other components that require recalibration with each repair, boosting the margins of Belron, whose know-how is recognized worldwide.
“Today, Belron alone determines almost the entire valuation of the group,” confirms Kris Kippers, analyst at Degroof Petercam, in an interview with ABM Financial News.
“In terms of gross margin, D’Ieteren should generate around EUR 500 million next year, of which more than EUR 450 million will come from Belron. That says a lot about the windowmaker’s weight.”
Kepler Cheuvreux, which has recently been following the share, also attributes a major interest to Belron. Of a fair value of 227 euros, the windscreen repairer alone contributes 165 euros.
In other words, when looking at the investment case, the investor should not dwell too much on the current uncertainties in the automotive sector, as evidenced by the slowdown in vehicle deliveries, Kippers said.
And rightly so, because the Volkswagen Group’s automotive distribution activities and associated services, such as maintenance, repairs, financing, used vehicles, etc., represent less than 10 percent of the holding’s operating profit.
“Looking at it from another angle, it is also less than 1 percent of the D’Ieteren Group’s stock market value,” Kippers said.
What can we expect in 2022?
Driven by its subsidiary, D’Ieteren’s share has returned more than 150 percent this year, a performance that will obviously be very difficult to match. However, analysts do not see the stock stopping there.
The six brokers that follow the file all without exception recommend buying the share, with a price target of 189 euros. Kippers is aiming for 207 euros, with which Degroof Petercam uses the most optimistic price target.
While he will keep a close eye on Belron’s margins and the difficulties in obtaining chips, the analyst says he values the company at €22 billion, while D’Ieteren, which owns half of the shares, is quoted at €9 billion. appreciated.
In July of this year, Belron welcomed new shareholders, raising the subsidiary’s valuation to EUR 17.2 billion, well above the consensus estimate of EUR 11 billion.
The sale of a 13 percent stake in Belron to Hellman & Friedman, Blackrock and GIC was expected in 2022 at the earliest, ING said, and is therefore an important driver for the share.
Degroof and Kepler also hope that new acquisitions will be announced next year. This year, D’Ieteren acquired a 40 percent stake in TVH Parts.
In the longer term, a separate Belron IPO could create shareholder value. However, according to those following D’Ieteren, such a transaction is not expected before 2023 or even until 2025.
Bron: ABM Financial News
From Beursplein 5, the editors of ABM Financial News keep a close eye on developments on the stock exchanges, and the Amsterdam stock exchange in particular. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.
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