Analysis: Market leader in VAT recovery

Visitors from outside the EU who have made purchases within the EU can reclaim the VAT they paid when they leave the EU again. The process of reclaiming seems complicated, causing many tourists to miss out. Swiss company Global Blue facilitates VAT reclaim by acting as an intermediary between consumers, retailers, customs and tax authorities. Results suffered greatly from corona when travel was down. Sales have since recovered, but not yet the stock price. Management is initiating new, high-value fintech activities and has the backing of reputable investors including Alibaba and Tencent.

Global Blue is not a small player but it does have a small price, which is grist for the mill of Equity Underperformers. Wall Street has little attention because its marketability is low. Deutsche Bank investigated the company and came up with a price target of $8 in September, which was lowered to $7 in November. Investors do not seem to see that Global Blue has put the covid period behind it and that its weak balance sheet will soon improve. We are therefore including 500 shares of Global Blue Group Holding AG in the portfolio of SharesUnion at the current price of $4.50.

Incorporation to IPO

The company’s roots lie in the Swedish port city of Trelleborg, where wayward entrepreneur Alf Näslund tried all sorts of things to attract tourists. For example, he had a local coin minted with Trelleborg scenes, for which he had to go to the Riksbank. He also had a park built with freeze-resistant palm trees, where the annual Palm Festival is still held. He had the most success with his company Trelleborg Tax Free Shopping, which helped customers reclaim VAT. Because of its success, he expanded to other European countries and changed the company’s name to Europe Tax Free Shopping. In 1999, the first private equity investors got on board, and global expansion began. In 2001, the company, now called Global Refund, moved to Switzerland, where it began facilitating currency transactions. In 2012, the company came into the hands of Silverlake, another private equity investor, and Swiss tech investor Partners Group stepped on board. Veteran Per Stettenberg had to step down after 25 years for new top executive Jacques Stern, who changed the name to Global Blue Holding AG. After the initial lockdown, Silverlake felt the time was right for the IPO, which took place in August 2020.

IPO

Global Blue merged with Far Point Acquisition Corporation, a spac sponsored by a consortium of Thomas Farley, the former president of the New York Stock Exchange, on the one hand, and Third Point Capital, the hedge fund of investor Daniel Loeb, on the other. The IPO value came to $2.6 billion, double what Silverlake had put down in 2012. One of the new investors who climbed on board was Ant Group, Alibaba’s fintech subsidiary. Last year, Alibaba’s rival Tencent bought 18 million shares for $5.5, half of which came from Silverlake, which now owns 67% of the shares. Tencent is the second shareholder with over 9%, Ant group is third, while Thomas Farley and Partner Group both own just under 2%.

Current business

Its operations are divided into three divisions: Tax Free Shopping Services (TFSS), Added Value Payments Solutions (AVPS) and Retail Tech Solutions (RTS).

TFSS is by far the most important division, contributing €229 million and accounting for 70% of group revenue. The division applies a 30% rate on recovered VAT. Relationships with some clients go back more than 20 years and earlier this fiscal year brought in Bottega Veneta, Audemars Piguet, Lacoste and Karl Lagerfeld. More than 80% of sales come from Europe and the remainder from Asia, while the first steps have been made in Latin America. Most sales come from American, Russian and especially Chinese tourists buying luxury goods in EU countries.
The most important part of AVPS is Dynamic Currency Conversion (DCC). In stores and restaurants with DCC, foreign tourists can automatically pay in their own currency. It is widely used at tourist attractions and airports. Turnover last year was €62 million with which the division supplied 20% of group sales.
RTS is made up of a number of fintech acquisitions active in e-commerce and omnichannel distribution. These include exclusive delivery, return delivery and digital receipts. The new division’s revenue contribution is only 6% but grew 65% last year, 39% of which came organically. RTS has a collection of majority interests that could be acquired thanks to its partnership with CK Opportunities Fund. As part of the partnership agreement, the fund invested $180 million in preferred shares of Global Blue and $45 million in common stock. The preferred shares provide a 5% cumulative dividend and are convertible into 21 million common shares. If CK Opportunities were to convert, it would become the second shareholder with a 13% stake.

On the board, in addition to representatives from Alibaba, Silverlake and Partners Group, we found the aforementioned Thomas Farley and Eric Meurice, the Frenchman we remember from his time at ASML. They are based in the town of Nyon on Lake Geneva, from where 1,800 employees in 40 countries are managed. The company serves more than 300,0000 stores, hotels, restaurants and banks.

Results development

The bar chart above shows the impact of the lockdowns well. The broken fiscal years end March 31 so the results for the first six months of the current fiscal year (FY2023/2024) were announced in November. Revenue grew by 50% and adjusted EBITDA by 130%, although growth weakened somewhat in the last few months. The multi-year results table below shows that ebitda for FY2022/2023 was already positive again and for the last four quarters to October 2023 (TTM, trailing twelve months) net profit was also positive again.

Strategy

Management used the covid period to improve internal processes. Over 40% of tourists who could reclaim VAT find the process too laborious or are not well informed about the possibilities. The processes were further digitized, making the process less labor-intensive and cheaper. By covid, the risks of the high dependence on tourists became painfully clear. Therefore, the strategy is now focused on diversification in a way that connects with already existing customer relationships. Among the results of that strategy are the expanded e-commerce service offerings in the AVPS division and the fintech acquisitions of RTS. Management expects long-term revenue growth to average 8% to 12%, with EBITDA margins rising to 50%.

Balance

In August 2020, the cash position was well stocked by the IPO, but then the lockdowns have left a sizable hole, leaving S&P’s credit rating no more than a meager B+. In September, the company had €729 million in long-term debt, of which, after deducting the cash position, a net debt position of €568 million remained. Due to cash flow recovery and Tencent’s investment, net debt is now more than $100 million lower than it was in March 2023, which is also necessary as annual interest expenses rose toward €50 million due to higher interest rates. In November, a €610 million loan was taken out for seven years at euribor plus 5%, which is now effectively over 8%.

The ratio of net debt to ebitda must return to 2.5x, which is projected to be achieved by March 2025. For fiscal year 2023/2024, management expects to achieve adjusted ebitda of €125 – €145 million and for fiscal year 2024/2025 more than €200 million. Thus, net debt only needs to fall €62 million to meet the target, which can easily be achieved from free cash flow.

Rating

At the current share price, the enterprise value is $1.65 billion, implying that the ev/ebitda ratio for next year maxes out at around 8x, which is cheap for a stable quality company with good prospects. That the stock is too cheap at $4.25 is also evidenced by the fact that Tencent was recently willing to pay $5.50 for it. The market capitalization of $1.04 billion is not only much lower than the $2.6 billion at the time of the 2020 IPO, but is also lower than the $1.3 billion that Silverlake plunked down in 2012. Another private equity investor recently paid €1.8 billion for its much smaller competitor Planet Payment, even though that company generated revenues of only $50 million in 2019.

Conclusion

Global Blue is not a small player, yet Wall Street has paid little attention because its marketability is low. Only Deutsche Bank investigated the company and came up with a price target of $8 in September, which was lowered to $7 in November. Investors do not seem to see that Global Blue has put the covid period behind it and that its weak balance sheet will soon improve.

The spectacular growth in results will level off a bit in the coming quarters, but the company is stable, has strong positions in attractive niche markets, while the risks are decreasing as its dependence on tourism diminishes. By the way, Chinese tourists may still cause a positive surprise because they were still in lockdown until 2023 and their tourism spending has not yet returned to its former level. After all, it is also not for nothing that Chinese tech giants Alibaba and Tencent are now among the major shareholders.

Equity underwriter includes 500 shares of Global Blue Group Holding AG in the portfolio at the current price of $4.50.

The author has a position in warrants Global Blue.

Important date
Feb. 23: presentation of third quarter FY2023/2024 results

Fundamentals Global Blue
Name: Global Blue Holding AG
Stock Exchange: NYSE
Ticker: GB
ISIN: CH0562152865
Ticker warrants: GB.WS (08/25 @$11.50)
52-week high: $7.60
Lowest rate 52 weeks: $4.01
Price at time of writing: $4.25
Number of shares: 230 million
Stock market value: $1.04 billion
Enterprise Value: $1.65 billion
Adjusted Ebitda: FY2023: $78.8 million (March 2023)
Adjusted Ebitda: FY2024: $145 – 165 million (forecast March 2024)
Adjusted Ebitda: FY2025: minimum $200 million (forecast March 2025)
EV/Ebitda: 8x (FY2025 adjusted ebitda)
Website: ir.globalblue.com

Verder lezen?

Dit artikel is alleen voor abonnees van Aandelen Onder Een Tientje. Indien u nog geen abonnee bent, overweegt u dan ook een abonnement.

Join thousands of others?

Become a member now and get instant access to our entire platform.

The value we offer:

Remarcable 29% profit in 2024
Get all analyses of stocks under a tenner
Get insight into our current portfolio
Receive weekly updates on our portfolio
Ask your general questions about our portfolio

Lees ook

No posts found!

test fonds

Let’s be honest — it does look good when you’re trading “shares under ten” and you’ve got Rolls-Royce in your portfolio. Despite the prestigious name, this stock fully qualifies as a true penny stock. Shares Under Ten is adding 2,000 shares to the portfolio at the current price of around 97 pence. 5-Year Share Price Performance – Rolls-Royce Holdings plc. Company Profile The Rolls-Royce brand is, of course, best known for its luxury cars — but many may not realise that the automotive business has long been owned by BMW. Rolls-Royce Holdings plc, founded in 1884 and headquartered in London, operates independently and focuses on engineering and power systems. The company is structured into four divisions: Civil Aerospace, Power Systems, Defence, and New Markets. The Civil Aerospace division designs, manufactures, and services engines for large commercial aircraft, regional jets, and business aviation. The Power Systems division develops and sells integrated power and propulsion solutions for marine, defence, and selected industrial sectors. The Defence division supplies engines for military transport aircraft, patrol aircraft, and naval propulsion. The New Markets division focuses on small modular reactors (SMRs) and new electric energy solutions, as well as maintenance, repair, and overhaul (MRO) services. The New Markets division is expected to play a key role in the global energy transition. Rolls-Royce is working to accelerate the launch of a new generation of mini nuclear reactors, a development fast-tracked by the ongoing energy crisis. While these SMRs aren’t expected to be operational before the early 2030s, management is eager to speed up the process, especially as Western nations seek to reduce dependence on Russian fossil fuels following the invasion of Ukraine. However, engineers within the company have expressed frustration with the slow pace of regulatory approval in the UK, arguing that the government’s process for reviewing reactor safety is unnecessarily burdensome. Rolls-Royce aims to build SMRs that generate around 470 megawatts of power — just one-seventh the output of a large-scale nuclear plant, but at roughly one-twelfth the cost. The UK government has stated that the company’s technology is entirely new and must therefore undergo thorough scrutiny. Rolls-Royce engineers, however, point out that the technology is based on decades of experience in nuclear-powered submarines, a proven and extensively tested field. Rolls-Royce cannot be acquired without government approval. The UK government holds a so-called “golden share,” which grants it special veto rights. This share does not offer profit participation or capital rights, but allows government representatives to attend general meetings and block specific strategic moves — such as takeover bids — that could affect national interests. Financials The UK’s most well-known engineering firm was hit hard by the COVID-19 pandemic, as airlines pay Rolls-Royce based on the number of flight hours logged by its engines. Given these extraordinary circumstances, FY2020 and FY2021 are not considered reliable indicators of the company’s underlying performance. In 2021, Rolls-Royce reported £414 million in underlying operating profit, a sharp turnaround from a loss the previous year. Growth in the Power Systems and Defence divisions contributed significantly to this financial improvement. However, the company also reported a free cash outflow of £1.5 billion from continuing operations in the same year. CEO Warren East commented on the results: “We have improved our financial performance, met our short-term commitments, secured new business, and made important strategic progress during the year. While challenges remain, we are increasingly confident about the future and the significant commercial opportunities presented by the energy transition.” Rolls-Royce’s credit profile has improved since the onset of the pandemic, and its exposure to the Russia-Ukraine conflict remains limited. As a result, Moody’s upgraded the company’s outlook from negative to stable. Pros Strong visibility and predictability of earnings Stable margins in the Defence division New CEO Warren East is aiming to bring fresh momentum to the company Cons Loss of market share in the business jet segment Disappointing cash flow development High R&D costs for new engine programmes Conclusion We are not particularly enthusiastic about this stock. While management certainly shows no lack of ambition, those good intentions have yet to translate into improved results. The company appears to be spread too thin across too many markets — and it’s simply not possible to be best-in-class everywhere. A more focused approach would likely serve Rolls-Royce well. Divesting non-core activities and doubling down on key strengths could strengthen both performance and investor confidence. The business jet division, for example, already faced structural challenges before the energy crisis, and its outlook remains weak. A sale of this unit might be a sensible move — especially if a solid price can still be secured. Back in August 2021, management announced it was open to selling assets such as ITP Aero, the turbine blade manufacturer, in an effort to raise at least £2 billion. Strategic asset sales like these may be necessary to unlock value and refocus the company. Third-Party Analyst Ratings for Rolls-Royce. Globally, twenty analysts currently cover Rolls-Royce Holdings, and the consensus view is that the stock could gain around 28% over the next 12 to 18 months. At Shares Under Ten, we believe the share price has likely found a bottom, and we’re taking this opportunity to add the stock to our portfolio. Naturally, we’ll be monitoring developments closely. A takeover seems highly unlikely under current circumstances. Rolls-Royce plays a vital role in the UK defence sector, and the government holds a golden share that gives it veto power over any unwanted acquisition. In addition, ceding control over Rolls-Royce’s expertise in modular nuclear reactors would run counter to the UK’s long-term energy policy. Former Prime Minister Boris Johnson has been a strong advocate for nuclear energy and clearly sees the company’s know-how as a strategic national asset — especially amid the current energy crisis.Takeover rumours have surfaced before. Rolls-Royce was the subject of M&A speculation both in 2015 and again in 2020. However, following a series of profit warnings in 2015, the stock price fell by around 75%, and its recovery

Lees verder >

08/14/2025

Update

Weekly Update: Volatility Persists Despite Trade Agreements

The fact that one major trading partner after another is reaching agreements with the United States has not yet restored calm to the financial markets. Both in the UK and abroad, this summer’s earnings season continues to be followed by sharp share price movements. Expensive stocks combined with ongoing uncertainty are keeping investors alert. In many ways, this summer resembles the earnings season earlier this year. Back then, market nervousness was mainly driven by concerns over Donald Trump’s policy direction, and his influence remains noticeable. That said, investors now appear somewhat more used to his unconventional style. Despite the threat of import tariffs for countries without a deal, the market reaction has been relatively mild. The biggest moves are not coming from geopolitics, but from the fact that many stocks are priced for perfection. Valuations imply flawless execution and leave almost no room for disappointment. Even minor earnings misses can lead to steep declines, such as the nearly 15 percent drop in London Stock Exchange Group over the past two weeks. On the upside, there have also been clear winners. Our pick Rolls-Royce gained nearly 10 percent last week, and tech giants like Meta and Microsoft added hundreds of billions in market value after reporting strong results. The divergence is striking. Several other stocks in our portfolio have also reported quarterly results, making this a more detailed update than usual. Rolls-Royce: Still Climbing Rolls-Royce has significantly raised its full-year 2025 profit guidance. Operating profit rose by 51 percent in the first half to £1.7 billion, with the operating margin increasing to 19.1 percent. Free cash flow is now projected at £3.1 billion for the year, £200 million higher than previously expected. This improvement is largely driven by stronger performance in the jet engine division, particularly the Trent series. The company has succeeded in substantially extending the time on wing, meaning the number of operational hours engines run before requiring major maintenance. For the Trent 1000, a newly certified turbine blade now more than doubles that operating time. This is expected to lead to an improvement of over 80 percent by 2027, which is a positive development, as Rolls-Royce earns revenue per flying hour. Other divisions also performed well. Power Systems benefited from growing demand in the data centre market and increased interest from government clients. Meanwhile, Rolls-Royce holds a strategic asset with the UK’s SMR programme for small modular nuclear reactors. The company has been approved to build three units and is already seeing interest from the Czech Republic and potentially the United States. The market responded positively, with the share price rising 11 percent on the day of the announcement. Since CEO Tufan Erginbilgic launched his transformation strategy in 2023, the stock has increased by more than 400 percent. We have been invested since the beginning and are now looking at a gain of over 1000 percent. Still, we believe Rolls-Royce has further to fly. Rolls Royce share price performance over the past year. Source: DeGiro. Grab Holdings: Profitable, Growing, and Undervalued Grab, the Southeast Asian platform for mobility and delivery services, has reached a major milestone: profitability. In Q2 2025, the company reported a net profit of $20 million, compared to a loss of $68 million in the same period last year. This result exceeded analyst expectations. Revenue rose by 23 percent to $819 million, with growth across both the on-demand segment and financial services. Adjusted EBITDA increased by 69 percent to $109 million. This performance was driven by higher revenue, improved margins, and tight cost control. A key contributor appears to be the success of the GrabUnlimited loyalty programme, with subscribers spending more and ordering more frequently. The market is starting to take notice. The share price rose 10.9 percent over the past quarter and now stands at $5.29, still below the average price target of $5.91. The company has clear growth drivers, including digitalisation, rising consumer spending, and strategic investments in AI and autonomous vehicles. Its full-year EBITDA guidance remains unchanged at $460 to $480 million. We see Grab as an exponential story still in its early stages. Profitability is often the inflection point investors wait for, and that moment has now arrived. Grab Holdings share price performance over the past year. Source: DeGiro. Brunel: Cyclical but Undervalued Brunel reported a 12 percent drop in revenue for the second quarter, down to €303 million. On an organic basis, revenue declined by 7 percent, a slight improvement compared to Q1. Gross profit fell by 20 percent to €52 million, and underlying operating profit was nearly cut in half. These are not attractive figures, but they are not unexpected given the current state of the labour market. That said, the company has not remained passive. Management is implementing additional cost measures expected to deliver €10 million in annual structural savings. These actions position Brunel for recovery when conditions improve. We are holding our position. Demand for technical professionals is cyclical, but the long-term trend remains strong. Once the market turns, Brunel is well positioned to scale up quickly and benefit from the rebound. Brunel share price performance over the past year. Source: DeGiro. Centrica: Strong Cash Flow and Attractive Dividend Centrica delivered solid results for the first half of 2025, despite headwinds such as mild weather and pricing pressure. Adjusted EBITDA came in at £900 million, with free cash flow close to £250 million. The net cash position remained strong at £2.5 billion. Earnings per share rose to 7 pence. These are encouraging figures for shareholders. The interim dividend was increased by 22 percent to 1.83 pence per share, and the company is halfway through its £2 billion share buyback programme. For the full year, Centrica aims to pay a dividend of 5.5 pence per share, which equates to a dividend yield of approximately 3.3 percent at the current share price. Operational performance was mixed. British Gas Energy delivered strong results in the SME segment, while Centrica Energy and gas storage subsidiary Rough

Lees verder >

08/05/2025

Update

Weekly Update: Nuclear Energy and Earnings Season Fireworks

Earnings season has begun. What immediately stands out: companies are reporting surprisingly strong results, despite a world full of uncertainty. Currency risks, geopolitical tensions, and the looming import tariffs set for August 1st create a volatile backdrop. But for those who stay focused, the main story is one of profit growth, resilience, and new opportunities. At SUT, we remain active, alert, and optimistic. And now that earnings season is gaining momentum, we’re seeing our patience pay off. The same trend is visible in the United States, where the season kicks off slightly earlier with half-year results. So far, 12% of the S&P 500 companies have reported their quarterly results – and over 80% have beaten expectations, according to an analysis by CNBC. Behind the scenes, we’re already working on the next addition to our portfolio. We’ve identified a company with an impressive order book and solid outlook. Thanks to this strong foundation, we expect the stock to be less vulnerable to market uncertainty and price fluctuations. You’ll receive our in-depth analysis soon. Rolls-Royce: Above 1,000 Pence – But Far From Finished Our early standout is no longer officially a ‘share under ten’ – but that says nothing about its long-term potential. This week, Rolls-Royce broke through the 1,000 pence mark, a psychologically important milestone. But this is only the beginning. The demand for reliable, carbon-free energy continues to grow – and that’s exactly where Rolls-Royce fits in, with its small modular reactors (SMRs). These advanced nuclear solutions are expected to begin delivery by 2030. On July 31st, the company will report its quarterly results. That will give us deeper insight into new orders, profit margins, and future production capacity. Rolls Royce share price performance over the past year. Source: DeGiro. Brunel: A Laggard with Potential The analysts at Kepler Cheuvreux are paying attention: they’ve initiated coverage of Brunel with a Buy rating and a €12 price target. We fully support that view. Brunel’s share price has noticeably lagged behind peers like Randstad and Adecco in recent months. Yet the fundamentals remain strong, the order book continues to grow, and the global labor market remains tight. We believe the market will soon correct this underperformance. In our view, Brunel is a strong recovery candidate for the weeks ahead. Brunel share price performance over the past year. Source: DeGiro. Centrica: £1.3 Billion for Nuclear Power and Cash Flow Centrica plc is strengthening its position in the European energy market with a strategic £1.3 billion investment in the Sizewell C nuclear project. In return, the company secures a 15% stake in this future energy giant. The deal offers regulated returns of over 10%, protected against inflation — exactly the kind of stability investors seek in times of interest rate uncertainty and volatile commodity prices. The project also aligns perfectly with Centrica’s long-term strategy: predictable cash flows, a meaningful contribution to climate goals, and enhanced energy security for the UK. On July 24th, the company will report its half-year results. We remain confidently on board. Centrica share price performance over the past year. Source: DeGiro.

Lees verder >

07/23/2025

4.3/5