Le Belier, MGI Coutier, Montupet: Small-Cap French Auto Parts Makers

François Badelon and Raphaël Moreau presented their in-depth investment thesis on Le Belier (Paris: BELI), MGI Coutier (Paris: MGIC) and Montupet (Paris: MON) at European Investing Summit 2013.

Small-cap French auto parts makers: ROEs of auto parts makers have improved in recent years. Increasing concentration and new emissions regulations (e.g. leading to OEMs compensating them for R&D) are likely to sustain this. Le Belier (Paris: BELI), MGI Coutier (Paris: MGIC) and Montupet (Paris: MON) remain relatively cheap at 5-8x 2014E P/E and 5-6x 2014E EV/EBIT, especially compared to larger auto parts companies such as Valeo, Plastic Omnium and Faurecia which trade at 8-10x 2014E P/E and 7-8x 2014E EV/EBIT. Le Belier is the worldwide leader in aluminum braking systems (42% market share). MGI Coutier, expert in fluid transfer, has ~50% of sales outside Europe. Montupet has a poor track record, but is a technological leader in the now duopoly cylinder heads market. Strong FCF (~10-13% in 2013&14) and backlog.

Please note the following correction to the table on slide 18:

For Plastic Omnium, the 2013 PE should be approximately 14x instead of 20x (1H13 net result was 96 million). The 2014 PE should be reduced accordingly.

About the instructors:

François Badelon is chairman, managing director, and head of equity management at Amiral Gestion. François has over 25 years of investment experience. He started his financial career in 1986 with Meeschaert-Rouselle, a Paris brokerage firm, and moved on to Exane, where he worked from 1990 to 2001. In 2003 he founded Amiral, an independent asset management firm based in Paris, where he manages the Sextant funds. Amiral’s single goal is sustained performance with minimum risk based on the firm’s value investing approach.

Raphaël Moreau made his first investment in the stock market in 1998, when the French State listed a portion of its shares in France Telecom. Progressively, being won over by a passion for investing and reading the writings of Warren Buffett, he joined Amiral Gestion in 2008 following the completion of his Master at ESSEC Business School and experiences in sell-side research at UBS and fixed income analysis at CACIB. Founded by François Badelon, Amiral is an independent asset management firm based in Paris. Amiral’s single goal is sustained performance with minimum risk based on the firm’s value investing approach.

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