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Gulf Capital 19/10/21 16:40
Ha comentado en el artículo Tesis de inversión en SEBINO – Safe. Always.
Hi - thank you for the great article (and sorry for the message in English).I have spent a bunch of time looking at this business over the last couple of weeks (which actually also appeared on a random screen for me), and I'm delighted to have found somebody to compare notes with.If you ever get some time, I would really appreciate your view on the following:1. Do you know why the seasonality of the business is so heavily skewed to the second half of the year? It makes me a bit suspicious given the discretion management have over the recognition of revenues.2. Did the CFO give you any colour on the extent of the gross and EBITDA margin expansion in 2020? I saw their slide explaining the EBITDA margin expansion in 2020 which put it down to gross margin expansion in the Fire BU... But revenue growth was **only** 11% in 2020 in the Fire BU. Is the degree of operating leverage really that high? You flagged the operating leverage in your report, but I wonder if there is some sort of one-off benefit/something non-recurring in there? My guess was a very large and (and very profitable) contract in 2020 that is unlikely to recur.3. On the margin point, it really seems like there is something funny going on. I don't know how this business generates a 23% EBITDA margin. API in the US for example does something similar business-wise, and they only manage a ~10% adj. EBITDA margin (https://ir.apigroupcorp.com/docs/592c4-api_group_investor_event_april_22_2021.pdf). They also recently acquired one of the largest Fire Safety and Security businesses active in Europe, Chubb and they printed a ~10% EBITDA margin (which by the way has a much chunkier share of revenue from maintenance/services than Sebino). Maybe these are not the best comparisons, but it certainly makes me question the sustainability of the current margin... Perhaps they have cosy relationships with the large Italian contractors, but I think I have also seen a ~20% EBITDA margin in Fire Romania!4. Do you have any idea who the 2/3 competitors are that compete with them for large projects in Italy? If I can get the largest, I can try get their financials and cross-reference the EBITDA margin.5. Related to 3. and 4. Are the barriers to entry really that high in Italy for a large operator like API/Chubb who has a proven track-record in other countries. You made a really good point on not risking your career choosing a cheaper local Italian Sebino competitor as a building contractor building out a large logistics centre... but if you are picking Chubb who sets up a local office in Italy, that probably doesn't come with the same career risk.5. Any idea what the receivable write-off related to in 2019? Think it was about 600k which is a non-trivial amount! It looks like there was no issue here in 2018 or 2020, so it really was just something exceptional. 6. Any idea why the effective tax rate is consistently above the corporate rate in Italy/Romania? My google translated version of the prospectus indicates they had some tax settlements due to various tax audits - I wonder if this is related? Thanks in advance!
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