Kühne + Nagel is a Schwyz-based transport and logistics group with German roots. It was founded in 1890 by August Kuehne and Friedrich Nagel in Bremen, Germany. In its early days, the group was mainly involved in the maritime transport of cotton and grain.
With 1,300 locations in around 100 countries and more than 74,000 employees, Kühne + Nagel is today the world leader in maritime transport and the second largest air transport company in the world. In road transport, the group is one of the 3 European leaders. Its market capitalization is 17 billion.
Listed on the Swiss stock exchange since 1994, the group is made up of four divisions: sea freight, air freight, land transport and logistics contracts. The key areas for K+N are by far sea freight (around 45% of gross profit) and air freight (33%).
The company is growing and steadily gaining market share, both organically and through acquisitions. It is very attentive to cost control and constantly seeks to optimize processes.
The net profit margin is rather low (around 4%), although this value is quite good compared to other companies in the same sector. Moreover, the margin has been improving constantly for several years.
The transport and logistics sector is relatively capital-intensive. This is why the company can make do with an equity percentage of 31% and the result is a very high return on equity (ROE) of 32%.
These characteristics allow K+N to distribute 75 to 100% of profit to shareholders each year, without jeopardizing the sustainability of the dividend. This has just been increased by 4.5%. At 144.75 fr, the current yield is 4%, a very attractive value.
The 2018 PER is estimated at 21, a historically reasonable value (average PER of the last ten years: 23). In addition, the current price is approximately 20% below its historical high.
At this price, I am buying this safe and rather defensive value. Kühne + Nagel is also qualitatively much more interesting than its competitor Panalpina, whose history is above all a succession of scandals, setbacks and unfulfilled promises.
Among the main risks of the sector, we can especially mention the dependence on global trade - and therefore on the global economic situation.
Let's summarize:
K+N is a quality company with a clear strategy and that creates value for its shareholders. I believe that this stock should be part of any portfolio and held forever in order to benefit from the expansion of global trade, higher prices and growing dividends.
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Thanks dividinde for this analysis. I had already heard the name of this company somewhere, but I would never have imagined that in Switzerland we had the world leader in maritime transport and the second in air transport. Not bad for a country that has no direct access to the sea 🙂
Indeed, the profitability of this company is impressive. Combine that with increasing goodwill and low capital expenditure requirements, and it smells a bit like a franchise. Only a bit because the margin, as you pointed out, is a bit low.
On the other hand, I find the cash reserves also low (and decreasing). Similarly, but you also pointed this out, the distribution ratio is very high (127% of FCF). These two points are nevertheless effectively partly offset by the company's strong profitability.
Finally, regarding the price, I'm playing the Scrooge as usual: I find it a bit expensive. If we focus on the price/sales ratio, it's okay, with 0.93, but that can be explained by the low margins. But hey, quality has a price 🙂
We'll see in the coming months if, thanks to the simpleton with the blond lock of hair, we'll find cheap quality titles. In any case, it's going in the right direction.
Indeed, the trade war launched by the simpleton is not at all to the stock market's taste. It's not yet the big sales (they should follow soon), but he's already starting to have some good deals. For example, I reinforced Burkhalter and Nestlé this week.
When American indices have been halved, and with them pensions, voters will finally open their eyes to this clown.
Master, can I have your opinion on Bellevue?
This title is quite incredible.
1) revenue costs are negative (!?!) => huge 4-digit gross margin!
2) the company makes losses, but the FCF is positive
3) the company therefore manages to pay a generous dividend despite the losses, thanks to the FCF
4) Huge FCF margin, also in 4 digits and net margin above 100%
Frankly, I don't know what to think about it. You should read the management reports in detail.
But when there are inconsistencies between FCF and profit, that's not a good sign. Or maybe I'm missing something. And then those negative costs are weird too.
What do you think about it?
Thank you for your answer. In my opinion, Bellevue's figures are not very significant because the bank has been in the process of reorienting itself since 2017 (stopping brokerage activities and focusing on wealth management). It's a bet on the success of the turnaround.
The large influx of new money is very promising, as are the commissions linked to its flagship product BB Biotech.
I think there are quite a few risks but that a commitment towards 20 fr could turn out to be a good value deal.
With an increase of more than 100% in 2 years, the share price is now completely disconnected from the fundamentals and I cannot bring myself to keep a stock that has become so expensive.
So today I liquidated my entire position in KNIN @306. This jackpot was reinvested in the following 2 stocks: BCVN @85.3 and BKW @100.2.
Thank you Dividinde for sharing your position changes! One question though: do you sell and reinvest on the same day? It is clear that timing the market remains very complicated, however the current state of the market almost daily bullish since… I can't remember anymore… would encourage me to keep cash and wait for a tight and more fragile market. So I was wondering if the changes are all done at the same time or if you share the summary of your changes with us without the duration in time of these changes.
Thank you for your clarifications.
@AGU: I do indeed most often immediately reinvest the cash released by selling a position, partly because I want my money to work for me as quickly as possible, and partly precisely to avoid trying to time the market.
Sure, the market is expensive, but it's been that way for 10 years... By wanting to wait for the ideal entry point, you end up sitting on the sidelines and not getting the sweet dividends. By waiting one more day before launching, I found that I often ended up procrastinating too much and waiting a week before acting... then a month... then, etc.
I do the same thing with the part of my salary that I save each month: invest it gradually in what seems to me to be valued correctly, rather than accumulating it while waiting for "the market to come to its senses". My goal is to see my snowball grow continuously, not to be smarter than the market. 🙂
After that I don't want to spam this blog with all my transactions, that's why I only publish those related to securities of which I have presented an analysis.
Very nice shot bro!!!
It's true that the market is becoming more and more indigestible. It's incredible how it took off again after the corona crash, even though it was already starting from a very high point.
Like you, I hate having cash that doesn't bring in any money and I would like to be able to reinvest it as quickly as possible. That's what I do in a "normal" situation anyway. However, I can't bring myself to invest it in stocks that I consider overpriced. The problem is that it becomes a real struggle to find more opportunities, even by broadening your criteria somewhat. So I've been living reluctantly for quite some time now, with a portion of cash that's a bit too large for my taste.
I will do a summary on this during my first semester review, so very soon.