José Antonio Larraz of Equam Capital presented his in-depth investment thesis on Ti Fluid Systems (UK: TIFS) at European Investing Summit 2018.

Thesis summary:

Ti Fluid Systems is a leading supplier of fluid systems to automotive OEMs. It is the number-one global supplier of brake and fuel lines and number-three supplier of plastic fuel tank systems. The company operates in a global, niche business with strong market share and high barriers to entry, which are reflected in the company’s high profitability (14% EBITDA margin) and return on capital employed (above 20%). Management has extensive industry experience, with the CEO having worked in the automotive industry for more than forty years. TIFS shares recently traded at a large discount to comparable auto suppliers (4.5x EV/EBITDA and 10+% FCF yield) due to a potential share overhang from the majority shareholder and the risk of transition to electric vehicles. However, electric vehicles are likely an opportunity rather than a threat as the company’s addressable market could be significant higher in the coming years.

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About the instructor:

José Antonio Larraz is a founding partner of Equam Capital. Jose has 12 years of experience as a partner in Capital Alianza Private Equity, investing in Spanish private companies in the middle market. He has investment experience in chemical, food, retail, outsourcing and telecommunications sectors, having participated in the board of directors of six different companies. Jose has 4 years of experience in financial advisory, corporate finance and M&A at Lehman Brothers in London and New York and He is a Professor at Instituto de Empresa since 2008. Jose holds a degree in Law and Business Administration from ICADE University and MBA from Insead.