IEP - Viskase: Global Casing Major Trading At Just 5.5x EV/EBITDA
2024-04-09 03:12:39 ET
Summary
- Viskase is among the largest global producers of casings for the processed meat sector and forms part of Icahn Enterprises.
- The company had a good 2023 mainly thanks to lower raw materials and distribution costs in Europe and reduced its net debt to $150.8 million.
- Viskase seems undervalued, as it’s trading at 5.5x EV/EBITDA, about half the level of its major competitors.
- In my view, Viskase has a good chance to close the current gap in the valuations as Icahn Enterprises seems to be buying shares on the open market.
Introduction
I was going through the May 2023 report of short seller Hindenburg Research about conglomerate Icahn Enterprises (NASDAQ: IEP ) and what peaked my attention was the deep discrepancy mentioned between the net asset value ((NAV)) and market valuation for meat packaging firm Viskase ( OTCPK:VKSC ):
Viskase: Global Casing Major Trading At Just 5.5x EV/EBITDAAs one example, as of December 2022, IEP reported 90% ownership in shares of Viskase, a publicly traded meat packaging business. Typically, publicly traded companies are marked at their share price for NAV purposes. In the case of Viskase, IEP valued its 90% stake at $243 million. At the time of its valuation in December 2022, Viskase's entire market value was only ~$88.7 million, 67% lower than IEP's valuation.