Disclaimer: This isn’t funding recommendation. PLEASE DO YOUR OWN RESEARCH !!!!!
As talked about within the Efficiency evaluate, I had already construct up a brand new place in late 2024 in a brand new inventory. This time I’ll strive one thing new: I’ll solely publish just a few 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 publish on the finish.
0. Funding meme
For some unusual purpose, I felt the urge to start out the pitch with this reasonably “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 using 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 major quantity and 2024 seems like one other double digit progress yr (gross sales +10%, EBIT +20% 9M 2024).
The corporate now achieves strong 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 yr), the valuation may be very low with a P/E of round 10x for 2024 (and nearly no debt).
Though there isn’t any “onerous” catalyst, I do suppose that the inventory is a doubtlessly very enticing funding at present worth ranges for the affected person enterprise targeted investor.
- Introduction:
I had put Jensen Group on my watch listing throughout my “all Belgian Shares” collection 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 at the moment 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 expertise and thru acquisitions and personal developments grew to become a number one provider of enormous scale laundry options.
3.2. KPI overview
3.3. What Downside does Jensen Group clear up ?
Jensen is a equipment manufacturing firm that provides options for “heavy responsibility” wet-laundry functions. On their web site they provide a great overview of their utility areas:
So Accommodations, Hospitals. Cruise Ships are all heavy customers of “heavy responsibility laundry”. Regardless of the standard of the laundry course of itself, workers scarcity appears to be a giant difficulty within the laundry trade as nicely.
One must kind 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 presents are roughly absolutely automated options for many of the heavy responsibility laundry course of that may run 24/7 with a really decreased requirement of guide labour.
In case you wish to study extra, Jensen has plenty of good Youtube movies exhibiting completely different merchandise and laundry factories. I discover these Movies fairly stress-free after a tough day 😉
Compared to most opponents, Jensen can construct a big “laundry manufacturing unit” utterly and wherever on the earth attributable to 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 progress (Maxi Press is included on this)however nonetheless this seems spectacular. Particularly the numerous order consumption appears to point that additional progress is perhaps on the horizon.
Traditionally, Jensen has grown EPS by 11% over 20 years. Within the final 5 years, together with the Covid interval, progress accelerated to ~15% p.a.
Gross sales progress has been considerably decrease and appears like this (till 2023)
This hole is defined via a major enhance 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 give you a practical progress charge for Jenesen going ahead. Additionally it is clear that the final 2 or 3 years usually are not consultant with respect to prime line progress.
Then again, as talked about earlier than, there are some sturdy elementary tailwinds for Jensen. As well as, there may be additionally a great probability to promote greater worth elements (Robotics, Software program) and rising the share of Providers is a transparent technique, supported by the acquisition of Maxi Press.
Personally, I feel an natural EPS progress charge in a spread of 5-10% just isn’t completely unrealistic for the subsequent 2-5 years.
One attention-grabbing side with regard to quick time period progress can be the actual fact, that the large trade truthful TEXCare, which often takes place very 4 years occurred in November 2024. Apparently, the TEXCare 2020 didn’t occur attributable to Covid so this was the primary massive truthful after 8 years. I learn a number of feedback that the trade was VERY proud of orders at teh fare. I’m actually wanting ahead what Jensen will say after they report 2024 quantity s in early March.
It must be seen how Money conversion seems in a extra “regular” yr like 2024. if we assume a 80% conversion, then based mostly on ~50 mn EBIT for 2024, FCF can be~ 40 mn EUR and(together with Maxipress buy worth) someplace between 7-9% present FCF/EV yield.
That in flip would end in a return expectation in a spread 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 large query after all is how they are going to allocate money going ahead. In my view, they’ve allotted capital very nicely prior to now and I see no purpose why this could change anytime quickly.
There are additionally not plenty of comparable corporations that I can consider, actually indirectly. From my present universe, I’d suppose Krones and 2G Power is perhaps 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 are able to 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 wish to look deeper, identical as 2G. Nonetheless, in 2G’s case, plenty of progress appears to be priced in.
10. Conclusion & Abstract:
As talked about at first, it took a while earlier than my enthusiasm grew for the corporate. I had seemed on the firm already just a few occasions till I obtained actually . Nonetheless, the extra I researched and examine them, the higher I preferred the corporate and the enterprise.
On the backside line, one will get a decently managed firm that has first rate progress and margins at a really first rate valuation. In the event that they handle to proceed to develop, not solely EPS may develop however in some unspecified time in the future in time, right here can be a great probability 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 isn’t any onerous catalyst, the subsequent related date can be starting of March when Jensen then studies 2024 numbers. will probably be particularly attention-grabbing to see if orders have considerably elevated after the TEXCare truthful in November. If enterprise additional accelerates, I’d enhance the place to a full place.
Annex: Bonus Tune: “Soiled Deeds” from ACDC:
https://www.youtube.com/watch?v=whQQpwwvSh4
