Samse Group (ISIN FR0000060071) – A hidden French Compounder as exciting as watching paint dry?

Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH!!!

As in the past, due to the poor WordPress editor, I will post a summary here and attach the entire write-up in PDF format.

After teasing a new position at Nabaltec “Post Mortem”, I’m proud to introduce another (hopefully) super boring company for my boring portfolio.

SAMSE SA is a French company that distributes building materials to “professional” customers such as contractors, tradesmen, etc. It also has a smaller segment of DYI “Direct to Consumer” stores, which accounts for about 20% of sales. Samse operates only in France and is second only to Saint Gobain, which is, however, much larger even in this specific sector (2,000 stores vs. 350).

Here is an overview of the relevant “KPIs” for a share price of €190 (time of writing):

PDF file with detailed notation:

Pros and conswith

What I like:

  • Family owned/controlled
  • Exceptionally high employee ownership
  • Conservative financial profile and business model
  • Countercyclical mergers and acquisitions
  • Decentralized organization
  • Very good company culture
  • a business I kind of understand (distribution)
  • not attractive at first glance
  • a potential “soft catalyst” through an acquisition in difficult times
  • reasonable valuation

Risks

  • Still leveraged at Holdco level
  • possibly excess earnings in 2021 and 2022
  • The cycle in building materials can get even worse
  • low free float
  • adds to my exposure sector (Thermador, Sto, Solar)
  • For some reason, they stopped reporting in English as of 2018

Summary:

SAMSE seems to be one of those high quality “hidden champion” companies that I’m always looking for. Business is extremely boring and subject to economic cycles. On the other hand, the company seems to be very well run and they seem to be able to use the cycles to come out stronger from weaker than they entered.

I decided to allocate a 3% position in SAMSE at an average price of EUR 190 per share, financed mainly by the sale of the Nabaltec position. 3% reflects my current exposure to this sector.

Honestly, I don’t expect a big and fast increase in the share price. I actually hope that the share price does very little and that I can add if the fundamentals slowly improve over time as in the case of Schaffner and Meier Tobler.

Sources:

A big thank you especially to Jeremy from “French Hidden Champions” and Philippe Luchesi. Both guys are worth watching if you’re interested in quality French stocks.

Philippe at SAMSE:

Jeremy on SAMSE:

https://frenchhiddenchampions.substack.com/p/sfaf-analyst-meeting-report-samse?s=w

A recent interview with the CEO:

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