Raphaël Moreau presented his in-depth investment thesis on Motor Oil Hellas Corinth Refineries (Greece: MOH) at Best Ideas 2017.

Motor Oil Hellas Corinth Refineries is an independent company that owns the second most complex refinery in Europe, ideally positioned in Corinth, Greece, as well as >20% of the distribution of petroleum products in Greece. It has been an FCF machine, generating a FCF yield of 13.3% in just the first nine months of 2016 (taking out the inventory effect). It is a “great company in a bad zip code” as Motor Oil has thrived in recent years despite the severe Greek crisis (2015 was a record year). It is indeed a dollar-based business and despite 100% of the production being processed in Greece, more than three-quarters of volume is re-exported. It operates in a volatile environment. However, resilience during good and bad times thanks to a very strong asset and a clearly well-incentivized management (family owns ~50% of the company) as well as its cheapness (5.6x EBIT 2016E) make it a rather compelling investment. Improvement in the Greek economic environment could also enable the company to remove balance sheet safety measures and improve profitability even further.

About the instructor:

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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