Vicat: Take 49% profit in 6 months
Update FY 2024 + Sell order Doubler Portfolio
Short description
For the initial analysis, including a detailed description, market comparison, financial analysis, risks, and opportunities, click here.
The French company Vicat operates in the cement, concrete, and aggregates sector, supplying essential products for the construction and infrastructure industries.
Over the past year, Vicat produced 30 million tons of cement, with 16 plants spread across Brazil, France, Switzerland, Italy, the United States, Egypt, Senegal, Mauritania, Mali, Turkey, Kazakhstan, and India.
A key feature of these plants is their strategic location near limestone and clay mines.
Why We Selected Vicat
At the time of our purchase, Vicat was trading at 0.92 times its tangible book value, whereas its historical valuation had hovered around 2x over the past 15 years. The price-to-earnings ratio was 5.1, compared to a historical average of around 14.
A discounted cash flow (DCF) valuation indicated an upside potential of 57%, even with a discount rate of 12%.
It seemed as if the company's future looked bleak, but Vicat is a stable—albeit slow-growing—business, still led by its founding family despite having been established over 150 years ago.
At the time, I wrote:
"There is certainly cyclicality in the business, but the market appears to have already priced this in heavily. If results turn out better than expected, we might take a quick profit. If not, I would be happy to buy more if the price drops further."
The first scenario played out: we bought Vicat at €30.60 in late August last year and are now taking a quick 49% profit six months later.