On the stock market, the French leader in in-ground pools is reaping the benefits of recently announced record results. Its latest investments have paid off, and there’s no doubt more to come.
For the Piscines Desjoyaux group, whose eponymous family controls around 70% of the capital, 2021 will have been the year of many records, particularly on the stock market. Introduced in 1992 on what was then called the Second Marché, the share reached an all-time high of €31.90 on August 3, a level around which it still hovers today.
Record annual results
Published on December 17, the accounts for the 2020/2021 financial year, which ends with the month of August, are the main explanation for this. In fact, sales will have risen by more than 40% for practically the whole year, and over the whole of 2020/2021, billings will have come close to 161 million euros (+ 39.8%), an unprecedented figure.
Over the period, the group delivered 13,121 “8 x 4 meter equivalent” basins, 3,733 more than in 2019/2020, or an increase of 39.8% too. While sales in France were buoyant, rising by 33.1% to 94.3 million euros, export sales outstripped them, taking off by 50.3% to 66.7 million euros.
This dynamic performance boosted operating income, which soared by 67.1% to 35.1 million euros, raising the corresponding margin from 18.2% to 21.8%. Ditto for net income, which rose 82% to €25.5 million (€2.84 per share).
Optimism still the order of the day, dividend doubled
These historic figures do not prevent Piscines Desjoyaux from looking to the future with optimism. ” Since the beginning of the year, the Group has seen a significant increase in business in France and abroad”, says management, a trend it hopes will continue, while also aiming to “improve profitability”.
To “increase production capacity and (…) modernize industrial tools and processes”, the group will launch an investment program worth €25 million between 2022 and 2025.
In addition, the annual financial report published just before Christmas reveals the amount of the 2020/2021 dividend to be proposed to shareholders at the Annual General Meeting (AGM) on February 22: €1.02 per share, double the amount paid in previous years, but still a reasonable payout ratio of around 35%. This coupon will then be paid from April 1.
An increasingly healthy balance sheet
A key element for any company, net cash flow has, in 2020/2021, approached 31 million euros, compared with around 20 million in the previous two financial years, and less than 12 million in 2017/2018. As a result, Piscines Desjoyaux’s net cash position (meaning that the cash held by the Group exceeds the amount of its gross debt by the same amount) has practically doubled, to €36.8 million.
This represents almost 14% of market capitalization, or €4.10 per share, as well as a gearing (ratio of debt to equity of €97.6 million) that is logically increasingly negative (-37.6%).
Our advice on PISCINES DESJOYAUX: BUY
The swimming pool market is enjoying almost constant growth: Europe’s leading market, France boasts 2.95 million units, half of which are above-ground models (fast-growing, but with low margins) and the other half in-ground pools, which are much more profitable and for which Desjoyaux is the market leader. The group has changed: the record number of pools delivered dates back to 2003/2004 (14,918 units), when sales were just 83.5 million euros. By capitalizing on its comparative advantages (recycled polypropylene formwork enabling the design of basins of all possible shapes, pipe-free filtration) and the modernization and automation of its La Fouillouse industrial site (60 million euros of investment and R&D over six years), the group has successfully moved upmarket, a difficult exercise. What’s more, while the French pool market may now be less dynamic, the Group seems to be succeeding in deploying its model in neighboring European countries, which are relatively less equipped. It has ample resources to increase its production capacity, as its balance sheet is increasingly robust. Finally, the stock’s 2020/2021 P/E is just over 10x, while the yield is around 3.5%. We will therefore take a position on this stock.
Price at advisory date: €29.50
Price target: €36 , i.e. a potential +22%
Investor profile: small caps enthusiast small caps and growth stocks
Article published in le figaro.bourse