PhiAdvisor Value Sheet: Aalberts Industries (AALB-NL)

23/04/2021

We've had a long enter signal since 09. 11.2020, a signal Megatrend since 04.01.2021 and added the title to our Tactical Europe portfolio on 10.11.202.

Industrial holding in the purest sense of the word: Aalberts is active throughout the value chain of industrial flow ranging from pipes (tubes and valves) to flow control, through co-contained materials, instruments for measuring and controlling fluids. The group combines competitive advantage, margin expansion, strong FCF generation, disciplined allocation of capital employed and portfolio optimization.

As a result, the group increased its turnover by 5% per year between 2010 and 2020 and its dividend by 8%; the holding maintains an ambitious growth targets for it ROCE of more than 18%, considering current levels at 12.5% at the end of 2020 (pandemic impact) and 15% at the end of 2019.
The restructuring of the group (50m € of exceptional costs in 2020) will help to improve the conversion level of the FCF, already at 90% of EBITDA. Finally, the group has some freedom to pursue new acquisitions with net debt at 1.1x EBITDA when the convenants are at 3.

The PE multiples at 24x 2021 or 21x 2022 are certainly at a premium compared to the multiple historical means (13x) but this is less the case for its EV/EBITDA 2022 multiple that would fall below 10x .

Short term catalyst: Impact of restructuring / Demand growth in air conditioning systems / Growth of electric vehicles
Long term catalyst: Industrial relocation/ Development of LNG and hydrogen transport / Rise of CAPEX infrastructures in gas and water pipelines.