Average weight of the Parisian quotation, Bassac (new corporate name of the company Les Nouveaux Constructeurs) nonetheless remains a confidential asset. Few of the analysts follow it. And the file is not on the radar of most of the portfolio managers of the place. This situation has its origin in the control of the Mitterrand family on the round table (more than 75% of the shares). More annoying: taking into account the shares otherwise controlled by the employees and managers, the real float on the title is limited to a dozen percent, knowing that the Magellan fund alone holds 7.93% of the shares. In short, you have to be motivated to bet on this file. All the more so in the current economic environment, which is still quite unfavorable for new construction, the sector in which Bassac operates. So much for the negatives. Because, on closer inspection, the title is not without interest. Spontaneously, we will mention as a first asset the importance of distribution. The dividend paid for the 2019 results thus amounted to 2.50 euros, providing a yield of more than 5%. Despite the health crisis, the remuneration of shareholders appears to be sustainable. Because the activity of Bassac generates a very high profitability, at the top of the basket of the residential development. In 2019, however a difficult year for the profession due in particular to the electoral calendar which froze the issuance of building permits, the group’s operating margin rose to 16.2%, down only 2.2%. As for the net result, it remained more or less stable, driven by the volume effect as turnover rose 16% to 975.6 million euros.
The solid balance sheet, a guarantee of resilience
What about the outlook for 2020? The recent activity update as of June 30, recently completed, provided the first glimpse of trends for the current year. Unsurprisingly, sales and commercial performance are down: under the effect of the shutdown of worksites for a month and a half, turnover fell in the first half by 8%, when reservations simultaneously fell 40%, penalized by the closure of sales offices and notary offices during confinement. No worries, however, as the order book and property portfolio are roughly stable year-on-year at 1.42 billion and 4.56 billion euros, respectively. Bassac has 18 months visibility on its business volume, which is very honorable. Regarding the loss of earnings linked to the health crisis, the leaders want to be reassuring. They talk about a temporary shift in turnover. The annual results will logically suffer, without collapsing. With equity which amounted to 501 million euros as of December 31 and a debt ratio of only 18% (on equity), Bassac can also be calm, even if the assumptions are made. darker for the new housing market. For the moment, the stock capitalizes 11 times our profit estimate for 2020 and only 8 times that for 2021. More than reasonable multiples which justify forming a small line, for the medium term.
Our advice: buy Bassac at 45 euros to bet an appreciation of 20% over an 18-month horizon. Isin code: FR0004023208.
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