Ideal Group SA (ATH:INTEK)

Q2 2016 – 0,76 EUR

1kr50öreIdeal Group SA is a Greece-based company engaged in the trade of high technology products and services. The Company’s main activities are representation, distribution and support of high technology products; office automation solutions; provision of computer security solutions through collaborations with international manufacturers, such as VeriSign and Check Point; integrated business informationtechnology (IT) solutions using tools like business intelligence and content management, and the provision of equipment and integrated solutions for customer support. IDEAL Group S.A. has four main subsidiaries: IDEAL Electronics, which represents and distributes Toshiba IT products, including notebooks, projectors and peripherals; My Multi Shop SA supplies Bizerba and Toshiba office automation products; Adacom is a provider of digital security services, and IDEAL Systems is engaged in the provision of integrated software solutions based on Unix and Wintel systems and after sale support. – Financial Times

1. Adequate margin of safety (criterion a) or b) must be met): 

a)

  • P/NCAV < 1x
    • 0,41x 

&

  • EV/Operating earnings(5y&10y) < 3x
    • 5y =  1,1x 
    • 10y = 0,9x 

b)

  • P/NCAV < 0,76x
    • 0,41x 
  • NCAV-burn rate  > -25 % for Qx – Qx-4 and Qx – Qx-1
    • Qx – Qx-4 = +5,2 % 
    • Qx – Qx-1 = +2,3 % 

2. The risk of permanent loss is low:

2.1 The risk of bankruptcy is low (criterion a) or b) must be met):

a)

  • Debt/Equity < 25 %
    • 0 % 

b)

  • Z-score ≥ 3
    • -1,7 X

&

  • Debt/Equity < 50 %
    • 0 % 

2.2 The company’s business model is not totally unprofitable (criterion a) or b) must be met):

a)

  • Positive retained earnings:
    • -76,022 (€000) X

b)

  • Positive aggregate operating income for the last ten years:
    •  13,821 (€000) 

3. The risk of share dilution is low (criterion a) or b) must be met):

a)

  • Share dilution < 2 % for Qx – Qx-4 and Qx – Qx-1
    • Qx – Qx-4 =  -0,08 % 
    • Qx – Qx-1 =  -0,03 % 

b)

  • The company has net repurchased shares over the last ten years:
    • The increase in share capital year 2007 and 2005 is greater than total buybacks for the last ten years. X

4. The risk of fraud is low (overall assessment on the basis of the answers below):

  • Today’s management has not historically been linked to fraud:
    • I have not found any historical indications of fraud from INTEK’s current management.  
  • The company is not mainly Chinese (business and/or majority shareholder):
    •  Greek company with business operations focused on EMEA. Majority shareholder is a company from Switzerland. 
  • Company data exist for the last ten years:
    • Yes. 
  • The company has repeatedly allocated capital to shareholders (dividends and/or share buybacks):
    • The company paid out a dividend year 2013 and 2010 (0,37 resp. 0,60 EUR per share). In addition the company has continuously bought back shares during the last years. ✓
  • The CEO and/or insiders have ownership incentives (worth of shareholding / salary + bonus > 3x):
    • = N/A, I haven’t found the figures for CEO/insiders salary + bonus. X

Other notes:

  • INTEK’s largest shareholder (59 %) is a private company from Switzerland, Truad Verwaltungs AG. The company is a major shareholder of some other Greek listed companies.
  • The CEO (D. Samuel) owns 5,9 % of the shares outstanding.
  • INTEK is a nano-cap stock: 7,3 MUSD in market capitalization. The trading is very illiquid.
  • The company does not publish any reports in English. For my research and analysis I have used Google translate.
  • Other analyses of the company:

MoS

Disclosure: The author is long ATH:INTEK when this analysis is published.