Bolloré – a special french conglomerate

Mr. Bolloré is an outstanding capital allocator, and has grown the share price and book value of BOL over the past 20 years, respectively, by 1,213% and 1,953%.
– MuddyWatersResearch

Let’s start with the first valuation of my 2017 To-Do list: French conglomerate Bolloré

250px-bollorc3a9_logo-svg

As ebdem wrote in the comments, Bolloré is maybe a good choice. MuddyWaters valued it at 8.5€ in February 2015 … the stock is now around 3.50€. One point MuddyWatres made are the cross holdings which virtually reduce the shares outstanding.

If the stock really was that undervalued a share buyback (maybe in the form of more cross holdings) would definitely make sense. I will look out for that – of course there is a good chance that Mr. Bolloré knows better how to allocate capital than me 😉
Vincent Bolloré was is often named The Carl Icahn of France because of his active investment approach. Looking at the capital structure with a lot of listed subsidiaries reminds me a bit of John Malone/Liberty.

The operating business, which is very Africa, Logistics and Energy focused, did not have a good year in 2016 (3Q numbers are out). Turnover was down 10%.

Company Structure:

orgagb

(link to corporate movie)

The big ones that really matter are …

Transportation & Logistics (value ∼6bn €)

56% of the Turnover comes from this section – a lot of it from Africa. Bolloré owns container terminals, the Group also sees to all administrative and customs clearance for its customers. Futhermore, Bolloré Africa Logistics brings to its customers a full range of storage capability. Bolloré Africa Logistics now operates three rail concessions in Africa: Sitarail, Camrail and Benirail.

  • Port concessions and rail activities in Africa
  • #1 integrated logistics network in Africa
  • Network of 15 ports, 11 dry ports, 8 million sqm of warehouse facilities
  • 250 subsidiaries in 46 countries

 

Revenue for this sector was

3Q2016 – 4,052 mio €
3Q2015 – 4,466 mio €

MuddyWaters valued that Sector with €7.8 billion to €8.9 billion in feb 2016.
Evermore Global valued that Sector with €6.3 billion.

Havas (value ∼ 2bn €)

havasgroup.com – Bolloré owns 60% of Havas shares. HAV is the sixth largest global advertising company. Its business performance well in the past – revenue grew 3% in 2016 (3Q).

This is a taste of the work of Havas Worldwide:

Vivendi (value ∼ 5bn €)

Bolloré now owns 20% of Vivendi SA. VIV is a french media conglomerate that owns canal+ (a french/african pay tv channel) and UniversalMusicGroup. Vivendi itself owns some listed companies and has recently bought a stake in Telecom Italy, Ubisoft and Mediaset.

I owned vivendi through the financial crisis but sold some time ago. I have tried to value Vivend in May 2016 here. I’m looking forward to look at them again.

 

Other Holdings are:
Oil Logistics operations
Communication operations (media like the “direct matin” newspaper, telecoms)
Electricity Storage & Solutions operations
Mediobanca 7.9%
Socfin 38.7%
Vallourec 1,5%
Bigben Interactive 22%
Blue Solutions 89%

Management/Capital allocation (Vincent Bolloré)

Vincent Bolloré is an Outstanding Capital Allocator and Activist Investor – MuddyWaterResearch

His track-record looks great. When he rings the bell he doesn’t bring flowers. He moves and optimize the business and the management. Neither Ubisoft, nor italian Medaset (Silvio Berlusconi) were happy to find out that Mr. Bolloré bought a part of their company thought vivendi.

I recommend you to read the MuddyWaters Report- Report Feb 2015 about him. I have nothing to add on that.

Pro&Cons:

+ Management (Vincent Bolloré)
+ Capital allocation (Vincent Bolloré)
+ Track record
+ Good Price (+ build in margin of safety)
+ Blue Applications could be a moonshot investment
– cyclical business*
– complicated structure (impossible to understand)
– legally insecure environment/corruption (frontier markets)***
– business sensitive to Oil Price**
– The MuddyWaters-Case didn’t play out well for them (almost 2Y later)
– I have seen better structured reports
– France tax

*From 2008 to 2009 BOL’s segment revenue dropped -21.1% / listed holdings would probably also go down
**40% of operating costs in the business are fuel.
***Their Africa Business is very diversified around the whole continent – I can live with that

To be continued …

+++ preview: because I like the management and the cross holing structure gives me a margin of safety I bought some BOL shares the last week +++

 

Disclaimer

The content contained on this site represents only the opinions of its author(s). I may hold a position in securities mentioned on this site. In no way should anything on this website be considered investment advice and should never be relied on in making an investment decision. As always please do your own research!

My list of sources:
Bolloré IR – Q, Annual Reports and more
Vivendi Report – Share capital number
Havas – IR page
MuddyWaters – Report Feb 2015
Blue Solutions Ir (link)
Competitor: Kühne+Nagel (Q3_2016)
F d l’Odete (link)
Evermore Global – (link portfolio)

Advertisements

2 thoughts on “Bolloré – a special french conglomerate

    • Hi EasyWISA, thank you for sharing! Have not seen it yet. Very interesting article! (and funny timing btw)

      I also like the comments there about the risks in Bolloré (maybe debt in the cross-holding structrue)!

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s