IRCE spa.

[SandU]

An Italian cabel, winding wire manufacture with a mc of E56m.

 

P/NCAV around 0,8 + 30m in land and buildings. P/B 0,41.

 

Profitable 4 of 5 last years, pays a small dividend, seems to have FCF of around 20m last two years.

 

Someone knows why this company is so cheap?

I dont speak Italian and can´t c/p their reports inte google translate unfortunatly.

 

http://www.bloomberg.com/quote/IRC:IM

http://www.irce.it/eng/#

 

[peter1234]

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An Italian cabel, winding wire manufacture with a mc of E56m.

 

P/NCAV around 0,8 + 30m in land and buildings. P/B 0,41.

 

Profitable 4 of 5 last years, pays a small dividend, seems to have FCF of around 20m last two years.

 

Someone knows why this company is so cheap?

I dont speak Italian and can´t c/p their reports inte google translate unfortunatly.

 

http://www.bloomberg.com/quote/IRC:IM

http://www.irce.it/eng/#

 

 

My quick take:

 

Sales declined in 2012 and 2013

 

Net income declined to 1.1 M in 2012, 0.1M in 2013. Structural or cyclical issues ?

 

62M in net debt.

 

Small dividend

 

Microcap

 

Probably family owned and controlled with only 40% float

 

Not cheap on PE. Cheap on PB but tight control might prevent change.

 

;)

[yadayada]

seems like they are in run off mode. They are not getting new inventory, that is where all the cash flow comes from, selling off the inventory. At this point it would be valuable to know what they will do with increasing cash balances.

[oddballstocks]

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An Italian cabel, winding wire manufacture with a mc of E56m.

 

P/NCAV around 0,8 + 30m in land and buildings. P/B 0,41.

 

Profitable 4 of 5 last years, pays a small dividend, seems to have FCF of around 20m last two years.

 

Someone knows why this company is so cheap?

I dont speak Italian and can´t c/p their reports inte google translate unfortunatly.

 

http://www.bloomberg.com/quote/IRC:IM

http://www.irce.it/eng/#

 

 

My quick take:

 

Sales declined in 2012 and 2013

 

Net income declined to 1.1 M in 2012, 0.1M in 2013. Structural or cyclical issues ?

 

62M in net debt.

 

Small dividend

 

Microcap

 

Probably family owned and controlled with only 40% float

 

Not cheap on PE. Cheap on PB but tight control might prevent change.

 

;)

 

I haven't taken a look yet, but I'd like to point one thing out.  Companies that are cheap don't need an activist to revert to a more normal valuation.  There's this weird impression in the market that unless *someone* does something an undervalued stock will never rise.  My experience has been much different, cheap things appreciate and expensive things often fall.  This isn't true 100% of the time, and no one knows the timing, but it's roughly true enough that investors can make money off of it.

 

I'd like Gio's thoughts on this one.  The last net-net I purchased in Italy was run by the mafia, I sold out for a small loss. 

 

Icre is 50% owned by Aequafin Spa, I have no idea who they are, insiders own 6%.

[topofeaturellc]

seems like they are in run off mode. They are not getting new inventory, that is where all the cash flow comes from, selling off the inventory. At this point it would be valuable to know what they will do with increasing cash balances.

 

Its from copper prices. 

 

Think of this thing like its two businesses - making a widget that gets sold mostly to southern european white goods manufacturers and an entity that speculates (in a non-pejorative sense) on copper.

 

It could be interesting - but you'll need to strip out the copper gains and losses, probably adjust the B/S as well - to figure out sustainable returns for this.  I'd guess assuming mgmt isn't shady its worth 1x economic book, but I have no idea what that is, and figuring that out at least requires taking stab at marking to market the copper inventory to what you think a sustainable long-term price is and looking at the profitability of the widget biz.

 

Basically the logic is "metals trading biz = 1x book, metals converting biz 1x book" if that makes sense?  Maybe a bit less on the metals converting - especially given the no growth nature of their end market.  Hard to think of something more commoditized than copper winding wires for electric motors.  Also I'd bet when copper prices are rising strongly you don't capture the full upside and essentially price the widget making at a loss.

 

I looked really quickly and it seems like this is the main asset of the family - which is usually a good thing, but like the first two steps in my DD process for closely held companies like this is to read the related party disclosure and then figure out if this is the families main asset.

 

If I had to guess I'd say its a combination of being an Italian Family Controlled Microcap in a mediocre business with sizeable exposure to commodity prices.

 

Aequafin appears to be the chairman and CFOs holdco.

 

I agree - good things tend to happen to cheap stocks.

[SandU]

Thx for youre thoughts!

 

I haven't taken a look yet, but I'd like to point one thing out.  Companies that are cheap don't need an activist to revert to a more normal valuation.  There's this weird impression in the market that unless *someone* does something an undervalued stock will never rise.  My experience has been much different, cheap things appreciate and expensive things often fall.  This isn't true 100% of the time, and no one knows the timing, but it's roughly true enough that investors can make money off of it.

 

I'd like Gio's thoughts on this one.  The last net-net I purchased in Italy was run by the mafia, I sold out for a small loss. 

 

Icre is 50% owned by Aequafin Spa, I have no idea who they are, insiders own 6%.

 

 

 

Yes, i agree with you. Didn´t express myself to clear though. I think the stock looks abit to good to be true, its quite big for a netnet which makes me nervous. And i forgot, its got an F-score of 9 too! Thought it might be loaded with tons of operating leases or other commitments etc i havn´t found, or something like in youre last case, run by the mafia.