Stabilus: Competitively Advantaged Supplier to the Automotive Industry

Santiago Domingo Cebrian of Magallanes Value Investors presented his thesis on Stabilus (Germany: STM) at European Investing Summit 2022.

Thesis summary:

Stabilus provides gas springs, hydraulic dampers, and electromechanical systems to automatically open or close a car’s tailgate. The company is an important supplier to the automotive industry, with ~62% of revenue from the auto sector and ~38% from industrial applications. Stabilus products are used to control the movement of parts, such as tailgates, doors, or bonnets.

The company is a high-quality supplier to the auto industry, with best-in class margins and strong cash generation. Strong profitability results from market leadership, technology investments, and highly automated gas spring production (the company even designs and manufactures its own production lines). The latter gives Stabilus a competitive edge in cost, quality, and flexibility.

Stabilus has a strong financial profile with net debt to EBITDA of less than 1x. The shares recently traded at an EV-to-EBITDA multiple of only 6x and an FCF yield in excess of 10%.

Listen to this session:

slide presentation audio recording

About the instructor:

Santiago Domingo is an investment analyst at Magallanes Value Investors. Magallanes is an independent equity-only asset management firm, following value investment philosophy and controlled by its founders. Magallanes’ aim is to preserve and increase its clients’ capital by outperforming the market in the long term. Prior to Magallanes, Santiago worked as an equity portfolio manager for Solventis Asset Management, as an analyst for a start-up called OralSurgeryTube and in Endesa’s finance department. Santiago holds a Bachelor’s degree in Finance and Accounting from University of Zaragoza and a Master’s degree in Institutions and Financial Markets from CUNEF.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.