Author Topic: UNVR - Univar  (Read 1565 times)

Deepdive

  • Full Member
  • ***
  • Posts: 109
UNVR - Univar
« on: January 12, 2019, 10:29:15 PM »
UNVR sold off from the $31-32 range to $20 and the idea was written up on VIC.  It sounds like a nice safe recurring business that one can buy for high single digit FCF.  If they can integrate their acquisition of Nexeo well, then it is very interesting. 

Summary thesis

Recent market selloff combined with a weak Q3 for the company created the opportunity to invest in a quality compounder at fire-sale valuation multiples. Recent volatility in the shares distracted investors from the long-term opportunity created by the recently announced merger with Nexeo. We believe the shares offer c. 150% upside in a base case scenario over the next 2 years with minimal downside in a bear case scenario.

Business description and investment highlights
Following the merger with Nexeo (which should close in Q1-19), Univar will become the worldís largest chemical and specialty chemical distributor, followed by Brenntag. We believe chemical distribution is a fundamentally good business with numerous desirable characteristics and Univar in particular appears the most attractive company in the space:

Exposed to a secularly growing market
Market leader in most geographies in an otherwise fragmented market
High operating leverage
High return on invested capital
High barriers to entry
Whilst cyclical, itís relatively resilient during recessions
Deploys capital very effectively in accretive acquisitions
Disintermediation is highly unlikely



heth247

  • Hero Member
  • *****
  • Posts: 574
Re: UNVR - Univar
« Reply #1 on: January 13, 2019, 10:12:03 AM »
Thanks for the idea. When was the VIC write up published? I am still unable to see it.

walkie518

  • Sr. Member
  • ****
  • Posts: 425
Re: UNVR - Univar
« Reply #2 on: August 06, 2019, 01:04:59 PM »
market didn't like the quarter, down 4% today, maybe the market was expecting a lot more?

I'm not sure anything has changed here materially and it seems as though mgmt is still largely on track with synergies (reported $20m more than previously believed)

there has been gross margin and adj ebitda improvement, which should be the heart of the thesis...  the gem is certainly the US business as mgmt continues to find synergies and the new SAP ERP implementation will be a great tool for the sales team

should mgmt get to double digit adj ebitda margins, the company might be worth at least 30% more EV/EBITDA basis before assuming any growth to the top line?

what am I missing?

ander

  • Full Member
  • ***
  • Posts: 136
Re: UNVR - Univar
« Reply #3 on: August 07, 2019, 12:46:57 PM »
Iím guessing weakness for second half and respective guide down probably weighing on stock - which may also have negative implications for next year.

walkie518

  • Sr. Member
  • ****
  • Posts: 425
Re: UNVR - Univar
« Reply #4 on: August 12, 2019, 09:30:58 AM »
Iím guessing weakness for second half and respective guide down probably weighing on stock - which may also have negative implications for next year.

falling another ~3.4% today, no news to my knowledge

Spekulatius

  • Hero Member
  • *****
  • Posts: 3004
Re: UNVR - Univar
« Reply #5 on: August 12, 2019, 03:43:21 PM »
So whatís the case, to bust his vs. Brenntag BNTGY / BNR. DE? I bought some BNTGY today. The business is surprisingly resilient, even during a time of economic distress like 2008/2009.
To be a realist, one has to believe in miracles.