Séché Environnement: Uncertainty over Saur removed; good Q1 trends
BUY vs. SELL, Fair Value EUR31 (+21%)
In January, we downgraded Séché Env. to Sell ahead of: (i) a likely cut in guidance; and (ii) increasing risks related to HIME-Saur. Since then, (i) guidance has been adjusted down; (ii) the stock is trading 20% lower; (iii) Q1 sales organic trends were above our estimates; and last but not least (iv) last night the group wrote-down the EUR156.1m convertible bonds of HIME-Saur. Séché’s balance sheet and P&L no longer have exposure to HIME-Saur, which is a serious game changer for the group’s equity story, removing the main uncertainties. Investors will now look at Séché on a standalone basis, making apparent an attractive earnings trajectory (20% EPS CAGR over 2013-16) at an unchallenging valuation (7.8x 2013 PE). Hence, we move our rating to BUY from SELL with an unchanged FV of EUR31 per share.
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