Adler - Vice vs. Value - Positioning
All,
Please refer to our unchanged analysis of Adler here.
As the shares are plunging right through the €9.00 mark, we are reminded of the Debt Free mail we sent the other day. We have been waiting for some time for a chance to buy the shares low and this looks good enough for an entry.
Postponed Annual Report:
- Adler are signalling the postponement of their annual report due for end of March. Clearly, the special audit is not going as smoothly as hoped for. Or perhaps it’s just KPMG signalling how diligent they want to be.
Bulwiengesa:
- The independent Plausibility Check - unsurprisingly - confirmed the value of the rental business. Again, that portfolio and the cash on BS substantially cover all the debt outstanding. A sale of ADO and the remaining sale of Brack to LEG would leave behind a debt-free Consus 2.0.
Consus 2.0:
- Perhaps a developer like Consus 2.0 is not an ideal asset to own in a public company that is subject to so much noise among management and its shareholders.
- Fundamentally, we see at least €2.5bn in value cushion for shareholders, or a minimal valuation of €17 per share.
Consequences:
- We reiterate that we do not believe any report will uncover missing cash or value. Any criminal wrongdoing to be uncovered will be levelled at management and individual shareholders. So we see no reason to deviate from our fundamental view.
Investment Rationale:
- We have bought a 2% position in the AdJ shares at an average of €9.50 now, with a view to buying another 1% in the foreseeable future.
- Triggers to release such fundamental value could include a public bid to take Adler private or a take-over by one of its larger rivals. Any successful bid would have to come in well above current value to attract enough sellers. A take-private could well be hostile, seeking to replace management and naturally the shareholders, or at least their influence.
- Other triggers will include the eventual publication of results, the publication of special auditor reports at Adler and Aggregate, the sale of Brack and other assets.
- Should the special auditor report etc. be negative, it would likely drop the shares further, but it should contribute to the clean-up of the company and therefore should eventually help drive shares to reflect the fundamental value.
- We retain our positions of 2.5% in the Consus 22s as well as in the Aggregate 24s.
Please reach out to discuss,
Wolfgang
T: +44 203 744 7003