Inthe French distance selling operations of Manutan were transferred to caralogue subsidiary called Catalogue manutan SA. Inthe Group launched its strategy for the period to and designed its first European-wide offer. DA common technological communication platform for all Group companies was launched as early as July catalogue manutan , Manutan strengthened its presence in the trade sector by finalising a new acquisition in Great Britain: The holding company was then renamed Catalogue manutan International. The first e-business merchant sites were started up and e-procurement catalogue manutan were made available to Key Accounts. Manutan Group History Julyas part of its ambition to broaden its product range and strengthen its footprint in the United Kingdom, with its sights especially trained on the specialist customer segment, the Group acquired IronmongeryDirectan expert in delivering ironmongery products to tradesmen. Marchthe Group created its Digital Laba new entity to drive digital innovation.
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Posted April 17th, PA has shown an ability to grow at rates higher than inflation through a combination of organic growth, new country expansion, and select acquisitions. Most importantly, this growth has been achieved while maintaining double-digit ROEs despite a large net cash position. So why is this a good business? Large accounts can negotiate product discounts due to volume, but these price concessions are mitigated by smaller customers purchasing at full price via online sales channels.
PA to get better purchase prices , while at the same time allowing Manutan to hand out fewer volume discounts on the customer side. In addition, these kind of distributors benefit from positive working capital cycles during recessionary periods, as inventory is worked down and receivables are collected.
A big component of their procurement costs are the logistics of setting up purchase contracts and processing purchase orders across multiple vendors. Working through a distributor not only provides better pricing, but allows these companies to place one purchase order for hundreds of items versus placing hundreds of POs with multiple vendors, cutting down on transaction costs.
So scale becomes a big advantage MAN. PA is the European market leader , as customers look to rationalize all costs in the procurement process, not just the product price. This is illustrated in the graphic below: Performance Stems from Long-Term Thinking Another quote stuck out in the annual report compare it to W. The facility will be fully operational this year. This sounds like a long overdue project, and MAN.
These investments have consumed significant free cash flow, depressed margins and impacted ROIC over the last several years. Very few management teams are willing to make these decisions in the face of the inevitable pressure on their stock price — this long-term thinking is a major positive.
These investments also setup the company for the core part of the thesis: reversion to the mean. In March , MAN. PA purchased Camif Collectivites, a distributor to the public i. PA bought Camif after the bankruptcy of its parent company not to mention during a terrible economic climate. Check out the purchase multiples on the deal: 0. While the deal was done at a very attractive price, margins in Camif are structurally lower, and the continued problems in Europe have caused even greater pressure.
Several other geographic regions are currently reporting margins below long-term trends, with mean reversion potential there as well. Valuation Comp. Over the last five years, multiples have compressed sharply for both stocks. TAKKT arguably deserves to trade at a premium, but the current one seems far too wide.
However, in the long-term, this valuation disparity should close, as operating performance normalizes at MAN. In addition, Manutan acquired Casal Sport in Oct. Casal offers complimentary products to Camif, providing synergy opportunities and increasing scale in the public market segment.
PA offers an attractive risk vs. Why Is the Stock Cheap? Going forward, margins are expected to improve and IC should grow at a much slower rate or even shrink , driving returns closer to the long-run average. While a return above 50 for the PMI signaling expansion is probably unlikely in , the eventual recovery will provide a boost to results. In addition, many investors view family-control as a negative, a viewpoint I do not share assuming the family has a long history of prudent capital allocation, see my investments in TES.
PA , COM. Conclusion Manutan is a rather boring stock with a solid business model and long-term track record. With excessively bearish forecasts already baked into the stock and several areas of potential reversion to long-run averages margins, ROIC, comp.
Disclosure Long MAN. If you have enjoyed this entry. Please feel free to bookmark it using your favorite social bookmarking site.
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