Here is the gold company

Written by the Apostle Menthos

Real gold from the point of view of financial data and development prospects is the group in which we will reveal its virtues in today’s article.

This group does not owe a single euro, as in fact since 2011 it has had continuous negative borrowing starting with -700.49 thousand euros and reaching the fiscal year 2023 to have a net debt of -13.81 million euros and a net working capital of 14,82 million euros. It has proven to be a real money-turning machine, as in recent years the group has made significant investments not only for its development but also for real estate, which, as we will mention in more detail below, is able to generate significant capital gains for its shareholders because it is made in large tourist segments on the island. Crete.

So we are talking about the company AS (ASKO) whose main “declared” activity is the creation and marketing of games and whose headquarters are located in a huge privately owned complex of construction facilities, located on Ionias Street in Oriokastro, Thessaloniki, on a plot of land. Land with an area of ​​45,787.60 square meters. Including a state-of-the-art logistics center with offices and showroom with an area of ​​16,169.56 square meters.

This group will provide strong investment interest in the coming period for the following eleven reasons:

First, because the management is now determined to permanently leave the introversion that has dominated it until now and transform into an open group that has the ability to expand developmentally into new activities, always in line with its commercial orientations, doubling and tripling both its sales and profitability.

The first of a series of important acquisitions has already been made the day before yesterday with the announcement of the acquisition of exclusive distribution rights for infant, child and maternal products through the Chicco and Boppy brands, for Greece, Cyprus and with Bebe. Comfort and safety first brands, for Greece. The value of the deal is expected to rise to €1.7 million with the turnover of the acquired activity exceeding €5 million for 2023 and net profitability slightly above €500,000 with the Group strategically planning to drive it through synergies (sales through bebe channels and other own products) and economies of scale. (e.g. central accounting office, central warehouse, etc.), to 1 to 1.2 million euros… for starters. The next two acquisitions in the pipeline are said to be larger and capable of dynamically shifting AS Company’s financials upwards.

The second reason is the management’s new strategic plan to significantly increase the sales of self-produced products with a gross margin of 55% than other products with a gross margin of 35%.

The third reason concerns Romania, where the group was started through the subsidiary KIDS TOYS SRL and seems to have a very great development potential since the group started three years ago with sales of about 500 thousand euros and in 2023 it seems to have reached 3 million euros. In fact, do you know who is AS’s biggest client in this country? Jumbo. Write this down to keep it in mind for the future. The potential with the mentioned synergies is so huge that it can increase the turnover of the subsidiary to over €10 million. In Romania, the tax is also 16%, not the 22% in Greece. At the same time, the Group also has a subsidiary AS COMPANY CYPRUS LTD in Cyprus where it generates sales of approximately EUR 2.5 million with a tax rate of 12.5%. There also the group expects to double sales without having the same demographic potential as Romania.

The fourth reason is the significant investments made by AS over the past two years in tourist properties in highly profitable areas of Crete. In fact, the group has also made a very smart move to gradually purchase neighboring land in order to build up a very critical number of acres that will allow it to have a high building factor. One of these large areas also has an abandoned hotel that was built in 1991, which automatically means that he can build or renovate the existing hotel with the old and naturally larger building factor.

The group therefore has a total of: 62 acres in the Elounda area of ​​Agios Nikolaos Lasithiou, 45 acres in the Matala area of ​​Heraklion and 30 acres to be completed soon with another purchase underway 92 acres in the “Plaka” settlement of the Frosha community of Agios Nikolaos Lasithiou. It goes without saying that all three areas are very touristy. The amount invested so far amounts to €4 million, but given the critical size of the plots of land collected by AS, the goodwill that has begun to accumulate for shareholders is much higher than the acquisition price. However, there is already strong interest from foreign investors in a multi-development tourism project.

The fifth reason is of course the Group’s financial results, where in 2023 it achieved a record EBITDA of €5.5 million from €4.65 million in 2022, or an increase of +18%, with net profitability rising to +76% with the record also. From €4.53 million from €2.58 million in 2022. The very good trajectory will continue in the current year as well as in 2025.

The sixth reason is the profit return that the group has distributed to its shareholders in recent years, a profit return ranging from 5.50% to 4.20%, with the management appearing through an “unofficial” commitment to grant the mentioned rate of return every year. So, this year management will propose a dividend of €0.1376 per share, which is 19% higher than last year and almost double what it was in 2019 and 2020. That’s a dividend yield of 5.2%. There is also a call from shareholders for management to give this year a small but indicative return of capital.

The seventh reason that also shows the size of the great investment opportunity for the stock at the level of 2.70 euros is the “tangible book value per share” indicator, which shows the tangible book value per share. In simple words, in case the company goes bankrupt, shareholders will receive cash in the respective price produced by this index. Knock on wood of course. Well, according to this indicator, the share price rose to €2.85, while it is very likely to exceed €2.92 after the takeover. Just so you know, this price in the index we mentioned in 2011 was at €1.33, more than double that. In fact, there has not been a single year in the past twelve years in which tangible book value did not rise. We are talking about such a golden company.

This fact which is eloquently displayed in the chart makes us believe that the group belongs comfortably to the “growth” stocks and not to the “value” stocks and thus the capitalization of AS can justify a capitalization of 10 to 12 times EBITDA thus giving Target values ​​of €5 or capital of €65 million. So, at the moment, the stock is with Vwap in the last five meetings at a price of 2.65 euros, which is -10% (!) below the price that shareholders will receive with the “dissolution” of the company and with an upward margin of +89 % up to 5 euros.

The eighth reason is that AS stock since 2020 when the pandemic crisis spread until today has a negative performance of -14.5% compared to the strong upward movement of the market and the general index of +65.24%. This gap in ROI is more than tone-deaf especially in such a gem of a financial result. Everything shows that the stock owes a lot of movement, which looks like it will have the characteristics of a violent upward expansion, especially now that management has decided to become open not only because of the aggressive acquisition program that it is preparing and that it will likely present to the board. General Assembly next Thursday, but also from stock market information and progress on the stock exchange dashboard.

Therefore, the group’s openness is the ninth reason for the intense interest in investment, as the management works to open wide channels of communication with investors, institutional and non-institutional, large and small. It is worth noting that it will present, for the first time in its history, early next July, a presentation of its capabilities to institutions, analysts, and journalists in the Federation of Institutions. Generally forget that you are familiar with the behavior of the stock. Things are changing and changing fast.

The tenth reason is that AS opens a large circle of business by significantly enhancing its sales volume through the strategy of expanding its product portfolio with new categories of products targeting the mother, expectant mother and child, such as deodorants, pharmaceuticals or others. Lotions and cosmetics, hygiene, care and care supplies, child development supplies, medical technology products, child and infant seats of all kinds, even wheelchairs, bicycles, skates and scooters for all ages.

The eleventh reason is what we mentioned at the beginning of the article, that is, she does not owe francs, and therefore she does not have any financial expenses, while since the beginning of March she has not had any special energy expenses since the photovoltaic garden on the roof has been operating strongly in her building in Oriocastro. 145 kilowatts, which covers the company’s energy needs.

Graphically, AS Company stock now appears on the 2-week price chart having made a significant rally between €2.70 and €2.60, with buyers taking over 500,000 contracts within this range so far from sellers who are “finding it difficult” to see Price The future value of the company. Perhaps, of course, he played a role in the “laziness” and rising introversion of the group so far.

However, things are changing and the stock is heading towards the end of a stabilizing move, where, given the critical buying volume from various impatient investment hands, it will move violently above the €2.90 point and towards €3.30. Soon after, the way will be opened for AS’s all-time high of €4.32 in the summer of 2007 when the group made net profits of €2.85 million and now stands at €4.53 million. A strong uptrend is starting to form on the chart and a long-term bullish rally “W” will begin to push the stock price higher.

* Apostolos Manthos is responsible for technical analysis and investment strategy.