Cembra Money Bank, headquartered in Zurich-Altstetten, is one of the largest providers of financial products and services in Switzerland. The company focuses on the Swiss market and operates in various business areas: loans, leasing, credit cards and savings products.
Cembra is a spin-off of General Electric and was previously called GE Money Bank. The company has been listed on the Swiss stock exchange since the end of 2013.
At the end of 2017, Cembra acquired EFL Autoleasing, a company active as its name suggests in car loans. This transaction will create synergies and increase earnings per share starting this year.
Excluding acquisitions, organic growth in earnings per share has been slowed since the Federal Council decided in 2016 to cap the maximum interest rate on consumer credit, increasing it from 15 to 10%. Fortunately, the shortfall in consumer credit is offset on the one hand by the increase in credit card fees and on the other hand by the acquisition of EFL Autoleasing.
With a core equity ratio of around 20%, the balance sheet is very healthy for a banking company. In addition, the company is very profitable and offers good visibility. The cost/income ratio of around 43% is one of the best in the sector!
Cembra distributes approximately 60 to 70% of its net profit to shareholders, to which is often added an extraordinary dividend paid from capital reserves. However, the dividend is not expected to be increased in the next two years or accompanied by an extraordinary dividend due to the reduction in equity following the acquisition of EFL Autoleasing.
At the current price of 83.80, the 2018 PER is estimated at 16, a reasonable value in historical comparison. The dividend paid to shareholders in 2018 for the 2017 financial year is expected to be at least 3.45 fr, which corresponds to a yield of 4.1%.
The potential for price appreciation is attractive in the medium and long term and the generous dividend helps to weather the current stock market turbulence.
BUY!
Discover more from dividendes
Subscribe to get the latest posts sent to your email.
Français 
English 
Italiano 
Deutsch 
Español 
Português
Dividinde where are you going to get them?!? I didn't even know Cembra was listed!
Interesting, and not too expensive, especially since the current correction!
Thank you for this analysis.
This is the advantage of the Swiss stock exchange: If I'm not mistaken, there are something like 300 listed companies. It's a very small universe, so if like me you specialize in Swiss stocks you know them all at least by name and it's quite easy to keep an overview.
Of these 300, I would say that there are about a hundred that are not even worth looking at and that can be eliminated directly (like Schlatter, Adval Tech, Adecco, Airesis, etc.). There are – depending on the stock market cycle – 50 to 100 that are really interesting (like Vaudoise, Nestlé or IVF Hartmann). And there are about a hundred companies between these two extremes that are more mixed and require more in-depth analysis because they have many qualities but also many flaws (like Implenia, Sunrise or Bobst).
Cembra is in the top 50!
Well I am reassured I still know some of the ones you mentioned
There is indeed something to eat and drink!
A penguin is a man… Cembra 😉
(sorry, I couldn't help but do it!)
In great shape on this Sunday morning! It smells like a guy who hasn't yet evacuated all the Carnival residue
Thank you for this new analysis.
I have a question. Cembra lives off consumer credit in various forms, particularly in the automotive sector (credit and leasing). The borrowers of this type of credit are often sensitive to periods of economic crisis. Therefore, in the event of a general bad economic situation, with customers who are no longer able to meet their obligations, what would be the impact on Cembra?
Thank you Laurent Martin for this very pertinent remark.
It is clear that good risk management is essential in the consumer credit area, probably even more so than for traditional banks with mortgage takers.
Fortunately, the credit and leasing business only represents a part of Cembra's revenues. Credit cards, insurance and savings products are taking an increasingly important share and allow for a better distribution of risks.
On the other hand, the Swiss are known for their excellent payment moral and Cembra limits risks as much as possible through strict customer selection criteria as well as by creating provisions for non-repaid loans (I don't remember the figure anymore, but if I remember correctly it's something like 1% of credits).
Finally, strong equity should make it possible to absorb any additional losses (particularly in the event of an economic crisis as in your scenario).