CLASQUIN This document is being provided for the exclusive use of Baptiste DE LEUDEVILLE - Kepler Cheuvreux - generated at 2023-05-04 08:11:45
#RatingChange
Clasquin Hold (Buy)
Release date: 04 May 2023
Baptiste de Leudeville Equity Research Analyst +33 1 53 65 36 55
France | Support services | MCap: EUR160.3m |
Target Price: | EUR76.00 (70.00) | Change in TP: | 8.6% | |
Current Price: | EUR70.20 | Change in Sales: | 10.9% | 23E/8.6% 24E |
Up/downside: | 8.3% | Change in Adj EBIT: | 14.3% | 23E/1.8% 24E |
Market data: | 03 May 2023 | Change in Adj. EPS: | 33.1% | 23E/14.4% 24E |
Bloomberg: ALCLA FP | Reuters: ALCLA.PA |
Free float | 45.0% |
Avg. daily volume (EURm) | 0.1 |
YTD abs performance | 17.8% |
52-week high/low (EUR) | 70.20/45.60 |
Soft landing
Why this report?
As business conditions normalise, volume and gross profit yields have continued to decline in Q1 against very high comps. The normalisation of business conditions is reflected in the numbers as expected. The fall in gross profit is in line with numbers reported earlier by industry giants. The stock has performed strongly in recent days and weeks ahead of the Q1 trading update despite a tougher business environment. While we lift our TP from EUR70 to EUR76 following the Timar acquisition, we downgrade our rating from Buy to Hold to highlight more limited upside.
Key findings
- A 14% decrease in gross profit in Q1 reflects the normalisation of trading conditions (falling freight rates, slowing demand, improvement of supply chains). This is in line with what we observe at an industry level.
-
The acquisition of Timar is timely and strategically relevant, as it increases
Clasquin's exposure to differentiating markets characterised by significant growth potential and relatively limited competitive intensity. - We lift our estimates following the Timar acquisition as well as our TP. We downgrade our rating from Buy to Hold due to more limited upside.
Deconstructing the forecasts - For 2023, we are looking at a 20% decrease in gross profit on a LFL basis (-8% on a reported basis).
FY to 31/12 (EUR) | 12/23E | 12/24E | 12/25E |
Sales (m) | 806.7 | 797.9 | 823.1 |
EBITDA adj (m) | 27.6 | 26.6 | 26.8 |
EBIT adj (m) | 19.9 | 18.9 | 19.1 |
Net profit adj (m) | 11.5 | 10.8 | 11.0 |
Net financial debt (m) | 10.9 | 5.8 | -6.3 |
FCF (m) | -8.9 | 10.4 | 17.2 |
EPS adj. and ful. dil. | 4.98 | 4.68 | 4.75 |
Consensus EPS | 5.42 | 5.97 | 6.47 |
Net dividend | 2.01 | 1.89 | 1.92 |
FY to 31/12 | 12/23E | 12/24E | 12/25E |
P/E adj and ful. dil. | 14.1 | 15.0 | 14.8 |
EV/EBITDA | 7.5 | 7.6 | 7.1 |
EV/EBIT | 10.4 | 10.7 | 9.9 |
FCF yield | -5.6% | 6.5% | 10.8% |
Dividend yield | 2.9% | 2.7% | 2.7% |
ND(F+IFRS16)/EBITDA | 1.1 | 1.0 | 0.5 |
Gearing | 18.7% | 8.8% | -8.5% |
ROIC | 18.3% | 13.8% | 14.0% |
EV/IC | 2.1 | 2.0 | 2.0 |
Investment case
- Clasquin is a top-quality company that primarily bases its success on differentiated and highly attractive positioning in the freight forwarding industry. Clasquin has been implementing a well-functioning growth model with success, as evidenced by a robust 14% gross profit CAGR since 2015.
- Successful strategy execution: 1) well-led international expansion, 2) development of niche expertise and verticals (wine & spirits, art shipping, etc.) 3) smart M&A, 4) addition of value-added services for customers.
- In 2021-22, Clasquin took advantage of the powerful recovery in global demand and the massive disruption of supply chains. We expect some kind of normalisation in 2023-24.
Catalysts - Surge in freight rates due to high demand and tight supply chain conditions.
- Broader offer (logistics, supply chain, digital offer).
- Business ramp-up in fast-growing regions for trade.
Valuation methodology
- DCF (9.0% WACC, 3% terminal growth, 16% LT EBIT/GP).
-
Peers (applying structural discount to account for smaller size and lower liquidity).
Risks to our rating - Improving supply chain conditions create less favourable pricing environment.
- Freight capacity exceeding demand.
- Decreasing consumption and world trade.
Clasquin
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This document is being provided for the exclusive use of Baptiste DE LEUDEVILLE - Kepler Cheuvreux - generated at 2023-05-04 08:11:45
Clasquin Hold | Target Price: EUR76.00
Normalisation of business conditions, as expected
In the context of falling freight rates and a slowdown in demand, volumes continued to fall in Q1 (-13% YOY in air freight, -7% YOY in sea freight) as well as gross profit yields (gross profit/volume down 7% YOY in air freight and 6% YOY in sea freight). Accordingly, gross profit came down 14% (EUR30m vs. EUR35m in Q1 2022), slightly better than expected (KECH: EUR28m, i.e. -20%).
Note that these figures compete against very tough comps last year. Also, yields have remained well above pre-Covid levels. The decrease in Q1 gross profit is in line with what DSV and K+N reported earlier (-12% for DSV, -19% for K+N). Unlike air and sea freights, gross profit in the Road Brokerage business is up 15%. It does not yet include the contribution of Timar (to be consolidated from Q2).
Chart 1: Sea freight (000s of TEUs) | Chart 2: Air freight (000s of tonnes) | |
80 | 66 | 72 | 69 | 71 | 71 | |||||||||||||||||||||||||||||||
70 | 64 | 63 | 66 | 63 | ||||||||||||||||||||||||||||||||
60 | 56 | 55 | 60 | 59 | ||||||||||||||||||||||||||||||||
49 | ||||||||||||||||||||||||||||||||||||
50 | ||||||||||||||||||||||||||||||||||||
40
30
20
10
0
25 | 22 | |||||||
20 | 17 | 17 | 17 | 18 | 18 | 17 | 18 | |
15 | 15 | 15 | 16 | |||||
13 | ||||||||
15 | 12 | |||||||
10 | ||||||||
5 | ||||||||
0 |
Source: Kepler Cheuvreux | Source: Kepler Cheuvreux |
Chart 3: Sea freight - GP/TEUs (EUR)
350 | 299 | 294 | 319 | ||||||||||||||||||
300 | 272 | 288 | 291 | 282 | |||||||||||||||||
250 | 205 | 205 | |||||||||||||||||||
- 158 163 150 149 136
100
50
0
Source: Kepler Cheuvreux
Chart 4: Air freight - GP/t (EUR)
800 | 673 | ||||||||
700 | |||||||||
601 | 559 | 581 | 573 | ||||||
538 | 538 | ||||||||
600 | |||||||||
456 | 472 | ||||||||
500 | 425 | 410 | 427 | 443 | 441 | ||||
400 | |||||||||
300 | |||||||||
200 | |||||||||
100 | |||||||||
0 |
Source: Kepler Cheuvreux
Table 1: Gross profit (EURm)
Q1-22 | Q1-23 | Change yoy % | |
Sea freight | 10.7 | 8.6 | -20% |
Air freight | 18.9 | 16.6 | -12% |
Road brokerage | 3.4 | 3.9 | 15% |
Others | 1.8 | 1.0 | -44% |
Group | 35.0 | 30.1 | -14% |
Source: Kepler Cheuvreux
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This document is being provided for the exclusive use of Baptiste DE LEUDEVILLE - Kepler Cheuvreux - generated at 2023-05-04 08:11:45
Clasquin Hold | Target Price: EUR76.00
Timar: a strategically savvy deal
A highlight of 2023 so far was the acquisition of Timar, a specialist in international transport, logistics and customs that operates in Europe, North Africa, and West Africa. We perceive the acquisition of Timar as timely and strategically relevant, as it increases Clasquin's exposure to differentiating markets. These markets are characterised by significant growth potential and relatively limited competitive intensity. At first glance, Timar seems to be a quality asset. M&A is a smart way to boost international expansion.
We make the following observations on the deal:
- Clasquin's exposure to Euromed/Africa markets increases significantly. Indeed, Europe/Africa becomes the group's second largest route for trade after Europe/Asia. Africa accounts for more than 20% of business post-acquisition (13% previously). Clasquin will employ about 450 employees on the continent in 19 offices (for 1,600 people in 85 offices worldwide).
- The share of road brokerage us due to increase from 10% in 2022 to 21% in 2023, which should partly mitigate the impact of falling rates in sea freight and air freight in the near term.
- The penetration of global trade in Maghreb and Sub-Saharan Africa is rather low compared to more economically developed regions of the world. Although less significant in volume, Africa displays higher trade growth rate on average than world trade (a 7-8% annual growth rate compared to c. 3% globally). A country like Morocco offers attractive business conditions (ranked third globally in terms of FDI in 2023). The automotive sector, for instance, has a significant presence, with more than 250 companies. Clasquin is linked to the first private employer in the country (Japanese conglomerate).
- Maghreb and Sub-Saharan Africa are known to be rather difficult markets to navigate for a variety of reasons. Barriers to entry are relatively high. Consequently, the global freight forwarders have only a limited presence there. The competitive intensity is softer compared to traditional trade routes (e.g. Asia-Europe maritime route). We argue that Clasquin can take advantage of a differentiated positioning.
- M&A seems to be a smart way to avoid a potentially costly and lengthy process. The operation could save Clasquin some time and costs. As we have seen in Clasquin's history, it can take several years to finally reap the rewards of an organically driven expansion strategy in a new country. With Timar, Clasquin will be able to rely on an experienced and committed team from day one. Olivier Puech will remain CEO, which ensures smooth continuity of operations.
- Timar is a quality asset. The company is a well-established operator in Francophone Africa with deep roots and integrated networks in Maghreb (Tunisia, Morocco) and Sub-Saharan Africa countries (Ivory Coast, Senegal, Malia, Mauritania). The fact that the company is: 1) profitable (c. EUR1m in net profit for revenues of c. EUR60m in 2022); 2) family-owned; and 3) listed on the Casablanca Exchange are positive factors.
- We factor in the expected financial contribution of Timar (nine months in 2023 and three months in 2024). We model a EUR17m gross profit contribution in 2023 and EUR6m in 2024 at a 12% operating margin (in line with Clasquin's pre-pandemic level).
- The transaction price values the share capital of Timar at c. EUR12m (EUR13m implied EV). The implied EV/EBIT multiple amounts to 5x, a reasonable price for such an asset at first glance.
Estimates and TP
We have refreshed our estimates to take into account the acquisition of Timar (see above). We also fine-tuned our estimates for gross profit and gross profit yields, accounting for a more accentuated decline in volume but even smoother decline in gross profit yields (with a positive impact on estimates). All in all, we have raised EBIT estimates by 14% for 2023E.
After two exceptional years (2021-22) driven by booming volume and freight rates, business conditions are normalising. Our estimates for 2023 and 2024 reflect that. For 2023, we are looking at a 20% decrease in gross profit on a LFL basis (-8% on a reported basis) followed by a 6% decline in gross profit in 2024 on a LFL basis (-1% reported). We believe Clasquin will be in a position to report EBIT of c. EUR20m at a margin of around 15% (vs. 2021-22: >20%).
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This document is being provided for the exclusive use of Baptiste DE LEUDEVILLE - Kepler Cheuvreux - generated at 2023-05-04 08:11:45
Clasquin Hold | Target Price: EUR76.00
In the long term, we have a central scenario, based on 3% long-term annual growth, a 16% EBIT margin in cruising speed, and normative FCF of EUR15-20m. We factor these assumptions into our DCF (9% WACC). The method yields a equity value of EUR76 (sensitivity analysis gives a value range of EUR68-86 based on varying assumptions for terminal growth and normalised profitability).
Top-quality small cap in the freight forwarding/logistics industry
Clasquin is a top-quality company that primarily bases its success on a differentiated and highly attractive positioning in the freight-forwarding industry (not a giant, nor a local/regional player) which enables it to offer end-to-end solutions but with higher degrees of flexibility and customisation. Its global presence (65 offices across 21 countries and five continents) and deep offering gives it a competitive edge over smaller local freight-forwarders. Clasquin has consistently outperformed the overall market year after year. It is a clear indication of Clasquin's ability to win, retain, and grow customers, as well as its proven management and commercial skills.
Clasquin has been implementing a solid, successful growth model as evidenced by a robust 14% gross profit CAGR since 2015 (mostly organic). The main drivers have been:
- Well-ledinternational expansion (either organically or via the bolt-on acquisition of smaller players).
- The development of niche expertise and verticals (wine & spirits, art shipping, fairs & events, perishable goods) where unit value can be significantly higher than general cargo (e.g. textile, standardised products).
- Savvy M&A as a way to enhance the quality and scope of its offering, and/or strengthen the footprint in targeted locations.
- The addition of value-added services for customers (e.g. consulting in international logistics, collaborative real-time order management tool).
- The integration of a sophisticated, scalable transport management system (quotations, tracking, and electronic document management) with a positive impact on employee productivity.
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This document is being provided for the exclusive use of Baptiste DE LEUDEVILLE - Kepler Cheuvreux - generated at 2023-05-04 08:11:45
Clasquin Hold | Target Price: EUR76.00
Company description
Clasquin is an air and sea freight forwarder with a focus on Asia/Europe flows.
Management
Hugues Morin, CEO
Philippe Lons, CFO
Laurence Ilhe, General Secretary
Key shareholders
Free float | 45.00% |
Yves Revol | 41.90% |
Employees | 12.60% |
Others | 0.50% |
Key data charts
Price performance | Sales split by region | Sales split by division | ||
FCF | Sales and EBITDA margin | FCF and Capex to sales | ||
SWOT analysis
Strengths
- International integrated network (US, Europe, Asia).
- Differentiated profile (family-owned business, medium-sizecompany).
- Diversified and balanced customer base (first customer <3%of GP).
- Strong presence in China.
Weaknesses
- Limited presence in the US.
- Lower volume shipped, GP/volume, and conversion rate than competitors.
Opportunities
- Disruption of global supply chain.
- Development of niche expertise /verticals (e.g. wine, fine arts).
- Broadening of offering (overseas logistics, consulting, etc.).
Threats
- Slowdown in global consumption and world trade.
- Collapse in freight rates.
- Relocation of production in Europe.
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Disclaimer
Clasquin SA published this content on 04 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 May 2023 19:42:03 UTC.
