Hanseatic Champions
- HanseaticHunter
- Apr 22, 2021
- 2 min read
Today, we are announcing the launch of a unique new competition. Our goal is to find the best investment ideas within our “Hanseatic” investment universe. We will crown the winners (there will be more than one) as “Hanseatic Champions”.
To start off, here are some of last year’s champions, investments that performed very well for us:
Sinch, Sweden (MCap €10.0bn, EV €10.7bn)
It is sometimes amazing that expertise in an old technology (SMS communications) can be turned into something incredibly cutting-edge. This is what CLX Communications from Sweden did. With the recent trend of ever expanding corporate engagement with customers through all communication channels, they rebranded as Sinch and offered the complete package of customer engagement. The hottest area turned out to be payments security. 2-factor authentification is quickly becoming the standard for logins and payments. Sinch’s biz model offers excellent leverage by participating in their customers’ volumes.
3-year trend growth p.a.: sales +45%, operating profit +50%
Current year valuation: EV/sales 7.4x, EV/operating profit 67x
PVA Tepla, Germany (MCap €0.5bn, EV €0.5bn)
If you are active in a cyclical sector, it pays to be in the oligopolistic part of the business. When you think semiconductors, you think Nvidia with its dominance in graphic chips and sky high multiples. At the other end of the supply chain, you find a German engineering success story with PVA Tepla, a global leader in crystal growing systems, the basis for wafers. With some smart acquisitions and changes of their supply chain, margins are steadily increasing.
3-year trend growth p.a.: sales +13%, operating profit +13%
Current year valuation: EV/sales 3.3x, EV/operating profit 25x
Embracer, Sweden (MCap €10.5bn, EV €10.0bn)
Formely known as THQ Nordic, this company changed its strategy from developing big, expensive video games to an aggressive M&A machine and fittingly changed its name to Embracer. Its very successful “buy&build” strategy is realizing excellent synergies between their creatively independent development studios (63 in over 40 countries). Gaming is the fastest growing entertainment business globally (hanseatichunter.com/post/gaming-the-new-black) and received a boost during lockdown times last year.
3-year trend growth p.a.: sales +34%, operating profit +42%
Current year valuation: EV/sales 11x, EV/operating profit 27x
Init-Innovation in Traffic Systems (MCap €0.4bn, EV €0.4bn)
Init is not only a Hanseatic Champion, but also a green champion and a model of a successful family-run public company. While their HQ in Karlsruhe are a bit of a stretch for the Hanse, their global trading presence certainly fits. It now is the global leading supplier of IT solutions for public transport. A number of trends support their structural growth for years to come: urbanisation, smart cities, climate protection.
3-year trend growth p.a.: sales +10%, operating profit +15%
Current year valuation: EV/sales 2.1x, EV/operating profit 14x
Coming next are:
· ground rules for the competition, including which companies will be eligible
· modus of competition, including successive elimination rounds
· success factors
and, finally, we will send out an invitation for external ideas.
The HanseaticHunter
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