U10 : objectif 20€ pour CM - CIC Securities

par hercule4 , jeudi 06 avril 2006, 19:50 (il y a 6791 jours)

Our analysis: U10 has announced the acquisition of Dutexdor:
􀂃 Specialised in personal accessories (socks: 80% of sales, underwear:
20% of sales), Dutexdor generates sales of EUR30m, operating margin of
11% and net margin of 7%. Its customers include hypermarkets and
specialised retailers in France.
􀂃 The deal is based on en enterprise value of EUR13m, giving a P/E
multiple of around 6x, in line with U10’s acquisition criteria. U10 acquired a
60% stake and the remainder will be held by the two managers and
Dutexdor’s historical shareholder (private individual). We imaging that U10
holds an option to acquire the remaining capital in the medium term.
Based on the price paid, the deal should have an immediate accretive
affect (ROCE after tax of 16% compared with U10’s cost of capital of
around 8%). We are raising our 2006 and 2007 sales forecast to
EUR170m (vs EUR150m) and EUR208m (vs EUR173m) respectively and
our ebita forecast to EUR23.2m (vs EUR21.0m) and EUR28.6m (vs
EUR24.5m) respectively. EPS revised up by 12% and 16.5% respectively.
􀂃 In addition to the immediate impact on the accounts, the deal represents a
key strategic move: 1) it will boost U10’s expertise in its core activity, i.e.
the creation of product ranges and retail services; 2) it will give the group a
third area of activity, namely personal accessories. U10 was built on
textiles for the home (current sales of EUR60m), and subsequently added
on general store and creative leisure activities with the acquisition of
Codico and ID World (sales of EUR60m). This third activity will add a new
dimension and enhance future growth potential: in addition to socks and
jersey underwear, U10 may even add jewellery, leather goods, and other
products to its ranges in the future, although we do not expect it to venture
out of the “semi-permanent” segment, which is relatively removed from
fashion trends.
􀂃 Dutexdor should be fairly rapidly integrated within U10: remember that
Thierry Lièvre built his career on personal accessories. In addition to the
sharing of expertise, synergies should be possible at three levels: 1)
Dutexdor carries out sourcing in the same places as U10 (Turkey, Asia,
etc.) and should benefit from U10’s infrastructure and knowledge in these
areas. 2) Dutexdor had reached a dimension that required new structuring:
it should benefit from U10’s structures where financial management, IT
systems and logistics are concerned; 3) complementary customers.
Conclusion: In addition to the immediate effect on the accounts, this acquisition
represents a key strategic move. No change in target price (€20) insofar as we
had already integrated the prospect of external growth.
Target price: EUR 20.00