Barco: Improving Margins, Expanding into Higher-Value Niche Markets

Sebastien Lemonnier of INOCAP Gestion presented his in-depth investment thesis on Barco (Brussels: BAR) at European Investing Summit 2017.

Barco (€1.1 billion market cap) is a Belgium company providing visualization solutions for selected professional markets. It holds significant market shares owing to its competitive edge. The new CEO, who joined in late 2016 after almost a decade of mismanagement, is leading a pragmatic, disciplined, and business-oriented strategy to expand into growing niches with higher-value products. Management is putting in place a culture of organizational and production efficiency. Overlooked by investors and undervalued, Barco offers an investment case based on improvement in both growth and margins. Consensus expectations remain conservative given the last decade of low achievement and are well below mid-term management targets, providing potential for upside surprises. Despite growing 3-5% on the top line, with 12-14% EBITDA target and good FCF conversion, the shares trade at only ~9x EBIT in 2018-19E. Sebastien considers the valuation attractive in light of Barco’s brand recognition, strong position in niche markets, and unique global knowhow in its business areas.

About the instructor:

Sebastien Lemonnier serves as fund manager and analyst at INOCAP Gestion. Previously, he was with Mansartis, the Paris-based family-run financial services group. He joined Mansartis in 2014 after ten years of experience in European equities, both as financial analyst and since 2006 as fund manager. Before joining Mansartis, Sebastien had been managing the Tocqueville Value Europe fund. Sebastien holds a Masters Degree in Financial Management from Panthéon-Sorbonne Paris.

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