2024-04-01 08:50:04 ET
Summary
- We value Danieli's ordinary shares, whose upside should be the same as the savings shares which are the subject of the article.
- Company performance is solid, and countercyclicality is rather evident for now. The company is a leader in plant making, it has marquee customers.
- Corporate governance considerations here are important. The company is family controlled. The savings shares have a better dividend than the ordinary, but it's low.
- With dividends way below earnings yields, there is also the issue that the company could be investing more aggressively with cash buffer, which is overly conservative.
- Nonetheless, we feel that even with fudge factors, the valuation case is clear. We even think profit growth continues to be possible, but we note the weakness on the steelmaking side.
Danieli ( DNIEF ), specifically the saving shares, a concept that we explain in our last coverage , continues to be an attractive prospect. The trading dynamics are the same as the ordinary shares, as in they trade almost entirely in line with them, but they trade at a discount related to the control premium which is not only logical but empirically common in Italian markets between ordinary shares and their savings shares counterparts. If the ordinary shares are undervalued, then so are the savings shares in other words, and we continue to see a sharp discount due to the fact that this is another issue with high non-operating assets that almost occludes the market cap in the equity bridge....
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Danieli: Steelmaking Should Remain Under Pressure