Thomas Karlovits of Blackwall Capital Investment presented his in-depth investment thesis on Tomra (Norway: TOM) at European Investing Summit 2018.
Tomra is the world leader in high-tech sensor-based collection (plastic bottles, 75% global market share) and sorting machines (food, recycling and mining; global market shares of 25%, 50% and 65%, respectively). The company is well-positioned to capitalize on several megatrends:
1) In collection, public outcry on plastic pollution is driving new laws and regulations to collect single-use bottles (e.g., EU target of 90+% collection by 2025).
2) Food safety and quality is increasingly driving consumer spending. Fast-growing online grocery shopping requires granular sorting of food.
3) Urbanization requires smart cities and the recycling of waste.
Tomra is a rare combination of a down-to-earth conservative, high-quality management with the ambition to create a circular economy for the betterment of the planet. High ROCE and double-digit growth rates, backed by a strong balance sheet and sensible allocation of FCF, provide a solid base for the short- to medium-term outlook. With billions of products sorted every day, Tomra leads in artificial intelligence, deep learning algorithms, and big data. This will allow for new business models in the long term. Although the valuation looks rather ambitious on 2018-2019 numbers, Thomas believes it is attractive based on the medium-term outlook and inexpensive on the long-term outlook.
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About the instructor:
Thomas Karlovits founded Blackwall Capital in 2014, having worked in the equity research sector for over 23 years. From 2003 to 2014, Thomas was at Kepler Cheuvreux (Kepler Capital Markets prior to the takeover of Cheuvreux). Thomas most recently held the role of Head of European Equity Research from 2013, and was Deputy Head from 2007. During this time, Thomas was also in charge of investment strategy for the wider group. Between 2005 and 2007 Thomas headed the European Telecom sector. Thomas studied Business Administration and Economics at the University in Vienna.