Relais is an importer and technical wholesaler actively developing vehicle electrical equipment and spare parts business in the Nordic countries and the Baltics. The company acts as a trusted partner to its customers in the vehicle manufacturer-independent aftermarket in Finland, Sweden, Norway, and the Baltics. Relais creates value for its customers by providing vehicle electrical equipment, spare parts, and expert services reliably, efficiently, and in a timely manner for various stages of the vehicle life cycle.
It looks a bit like the money men are trying to cash in on this at the very last minute. Well, let’s see again when we know what kind of valuation they’re trying to achieve.
The market would be a bit bigger in Central Europe, which I don’t think we can access with these resources, and on the other hand, why wouldn’t Finnish companies order from there if the price level is lower? The fact that a web store has a functional search engine can’t be the only competitive advantage. Looking at the ownership group, pricing probably won’t be cheap.
It’s a bit of a shame that the IPO wasn’t a more interesting company. Car spare parts don’t really stir strong emotions in me.
But let’s see once the valuations and other IPO information come out.
Nokian Rinkulat (Nokian Tyres) will probably be enough for me from this sector, although through this one can get useful information, e.g., about forecasts, how car traffic is seen to develop in the coming decades. These spare parts dealers, like used car dealers (Kamux), make me a bit suspicious in the same way. There are some strong names involved, though.
I haven’t looked into the backgrounds of the corporate arrangements that have been made. Are there lock-ins and shares being sold to the market after the listing? In any case, a quickly growing enthusiasm for M&As is challenging from an owner-value perspective. Is a large amount of goodwill easily bought, which is then written down over several years? Or are optimistic calculations made about synergy benefits…
The industry isn’t the sexiest, but if it’s profitable, I don’t care if the company operates crematories. The most interesting aspect is naturally the offer price. Will there be patience to leave room for appreciation, or will the maximum be squeezed out of a cautious market?
100 million would be the market value. I’m trying to figure out how much debt there actually is with those key figures. It seems to be around 55 million in loans, and after the offering, assuming the numbers have remained the same, about 35 million. So the enterprise value would be 135 million euros.
FAS accounting has taken into account these new accounting practice-compliant leasing liabilities for properties, etc., which increase the debt somewhat?
Calculated from last year’s result, which does not include FAS-compliant depreciations, the P/E would be around 17.
e. If these figures are even close to correct after a quick calculation, this doesn’t really interest me much at this price. There seems to be a fairly decent amount of debt left too.
Edit: Report read. The analyst had dug deep into the background… I have a feeling that this will bring quick profits, but would it have potential for a longer-term portfolio… not necessarily. I’ll have to think about it.
I’ve also read the investment research. I’m going to participate in the IPO because for a long time, well-executed “core business” has been available at such a reasonable valuation. The need for a share issue (strengthening the balance sheet to continue growth) is also a good reason for listing. In my opinion, growth expectations have hardly been baked into the valuation multiples at all. Tesi as an anchor investor and chairman of the board Stadigh also adds confidence.
As I was down with the flu, I went and read Erkki’s excellent study. Although initially the company didn’t really interest me, through the study I even cautiously started to consider participating in Relais’ offering. Below is some of my own reflection:
Pros:
Strong owners (especially M&A expertise)
Defensiveness and low cyclicality
Consolidating industry
Cons:
No clear competitive advantage/moat
Somewhat stagnant market
Bigger changes in driving habits (especially brand-specific all-inclusive packages and similar solutions bypassing traditional repair shop operations)
However, as I only quickly read the study, it’s possible that I didn’t fully understand a few things. The study mentioned “Volkswagen’s Direct Express service with original spare parts, offered for cars over 5 years old, is an example of car dealers’ increased offering in the aftermarket.” As I understand it, do such solutions bypass the spare parts services of Relais Group and similar operators? If so, how rapidly is the market for such services growing?
In other words, as car maintenance becomes more complex and people become less handy, will repair shop operations that use Relais Group’s selection continue to decrease? Or how is Relais Group positioned for a potential change where, for example, car brands offer these multi-year contracts where cars are serviced with original parts by the car manufacturer?
So, this is some messy pondering early in the morning. Have others already had time to delve into the company?
This old shack doesn’t seem to interest anyone. It’s quiet here, and even on Kauppalehti’s forum, there’s not much chatter. A few people did admit participating in the IPO in the “I just bought/sold” thread.
I also watched the webcast from the IPO event, and it looks like I’ll be skipping this one. In addition to the previous negatives, the following thoughts came to mind:
The acquisition-driven strategy has its risks (cf. Erkki’s Mekonomen talks)
Potential new foreign and strongly digital retailers who compete on price (cf. talks about the Polish company on the comparison list)
The strongest self-confidence was missing from the speeches at the IPO event
Lack of a clear competitor analysis (difficult to assess the competitive landscape when everyone sells to each other)
There are many positive things, such as a broad customer base, a good market position, specialization in electrical parts, etc., but when there are so many other companies as investment options, it’s hard to justify putting money into Relais. Especially when the market seems very stagnant and there’s no clear competitive advantage.
It looks quiet here, even though there are still tours today and tomorrow. I do believe this will be oversubscribed, even though it is a surprisingly large company for First North, so there might be more of a challenge to oversubscription than usual.
My idea is to jump in and get out before the first results, because the presentation mentioned/suspected the results at best reaching the previous results. Apparently, this latest high result was due to acquisitions. It’s possible my listening comprehension was completely off, though.
Knowing small investors, if the results don’t exceed the previous ones, they’ll dump their shares and the stock price will take a massive hit.
From the perspective of my own strategy, my fervent hope is that this will be oversubscribed.
