BICEY - SociéTé BIC: Performance Keeps Improving

2024-01-26 03:53:32 ET

Summary

• Q3 2023 has shown that the implementation of the Horizon Plan continues to have positive effects.
• Revenues remain strong despite current macroeconomic challenges, but growth is expected to slow down in the foreseeable future.
• EBIT margins continue improving, boosted by manufacturing efficiencies and the ease of headwinds.
• The balance sheet is very strong, and the dividend is safe, which provides a lot of safety for dividend investors.
• This represents a good time to acquire shares from a long-term dividend growth perspective.

Investment thesis

I started covering Société BIC ( BICEF ) ( BICEY ) in December 2020 as impacts from self-imposed restrictions to stop the spread of the coronavirus worldwide, as well as operating weakness due to lack of enough product innovation and diversification over the years, caused a 70% share price decline from all-time highs reached in 2015. Furthermore, the global projected decline in smoking rates and the digitalization of school material and office tasks suggested that the trend would continue to be negative as long as the company did not adapt to these changes. I updated the situation in September 2023 as it seemed like the management was finally taking the necessary steps to get back on the growth path, but the share price was still 60% below all-time highs as inflationary pressures were having a significant impact on EBIT margins while recessionary concerns fueled investors' pessimism....

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