June 28, 2022
12:32
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Bank Degroof Petercam cuts the price targets of almost all holdings that the stock exchange follows. But it sees opportunities because the market punishes top quality too much.
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‘Hard times will not last, but quality will’, the analysts Joren Van Aken and Kris Kippers titled their 54-page report. Holdings such as Sofina, Brederode, Prosus, Kinnevik and Eurazeo lost more than 40 percent on average in the first half. The reason? They are all active in private equity – unlisted companies – often combined with a focus on growth stocks.
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“That segment of the market has enjoyed stellar returns over the past decade thanks to rising valuations and low interest rates. Now that the reverse is happening, valuations are rapidly declining,” the analysts say.
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“The bear market seems to punish everyone equally. Without distinguishing between the type of private equity – are companies in an early or late growth stage? – or the quality of the assets. We see opportunities in segments where the trend has gone too far.’
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Brederode and Eurazeo are safer options than Prosus and Sofina. The first two invest more in traditional private equity through buyouts of more mature companies.
Joren Van Aken and Kris Kippers
Analysts Degroof Petercam
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‘Prosus
and Sofina
are most exposed to growth stocks and venture capital. They are the most vulnerable. Brederode
en Eurazeo
are safer options. They invest more in traditional private equity through buy-outs of companies in a more mature stage.’
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Favorites list
In the ‘top pick’ list, Prosus – which records in Amsterdam – therefore has to make way for Brederode, even if the price target of the latter drops from 135 to 120 euros. The favorites selection also includes the French Eurazeo, the Italian Exor and Luxempart from the Grand Duchy. The Belgian Sofina is missing from the list, but receives a purchase recommendation. Although the price target drops from 363 to 264 euros.
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The rating for Ackermans & van Haaren (price target 178 euros) and GBL (price target 100 euros) dropped from ‘buy’ to ‘hold’. ‘At Ackermans’
the momentum for the construction and dredging subsidiary CFE is slowing down due to the challenging market situation. After the imminent split off from DEME we expect sales pressure on CFE. The private banking branch will be under pressure due to the stock market correction. As a result, the assets under management will fall.’
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‘peak prices’
‘At GBL
we fear it has paid peak prices for the recent major acquisitions from Affidea and Humanis. We do believe that GBL will include asset management for third parties through its subsidiary Sienna AM in its net asset value for the first time. Our price target takes into account a discount of 25 percent.’
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Finally, the analysts give a short idea: the Dutch holding company HAL
† ‘The cash position of 5 billion euros could be a great opportunity to invest in the current weak stock market climate. But as long as the money remains unused, it loses purchasing power due to high inflation.’
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