{"id":54612,"date":"2025-01-03T10:04:03","date_gmt":"2025-01-03T10:04:03","guid":{"rendered":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/geen-onderdeel-van-een-categorie\/analysis-market-leader-in-vat-recovery\/"},"modified":"2025-03-05T06:39:25","modified_gmt":"2025-03-05T06:39:25","slug":"analysis-market-leader-in-vat-recovery","status":"publish","type":"post","link":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/analyse\/analysis-market-leader-in-vat-recovery\/","title":{"rendered":"Analysis: Market leader in VAT recovery"},"content":{"rendered":"\n

Visitors from outside the EU who have made purchases within the EU can reclaim the VAT they paid when they leave the EU again.\nThe process of reclaiming seems complicated, causing many tourists to miss out.\nSwiss company Global Blue facilitates VAT reclaim by acting as an intermediary between consumers, retailers, customs and tax authorities.\nResults suffered greatly from corona when travel was down.\nSales have since recovered, but not yet the stock price.\nManagement is initiating new, high-value fintech activities and has the backing of reputable investors including Alibaba and Tencent. <\/strong> Global Blue is not a small player but it does have a small price, which is grist for the mill of Equity Underperformers.\nWall Street has little attention because its marketability is low.\nDeutsche Bank investigated the company and came up with a price target of $8 in September, which was lowered to $7 in November.\nInvestors do not seem to see that Global Blue has put the covid period behind it and that its weak balance sheet will soon improve.\nWe are therefore including 500 shares of Global Blue Group Holding AG in the portfolio of SharesUnion at the current price of $4.50. <\/p>\n\n

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Incorporation to IPO<\/strong><\/h2>\n\n

The company’s roots lie in the Swedish port city of Trelleborg, where wayward entrepreneur Alf N\u00e4slund tried all sorts of things to attract tourists.\nFor example, he had a local coin minted with Trelleborg scenes, for which he had to go to the Riksbank.\nHe also had a park built with freeze-resistant palm trees, where the annual Palm Festival is still held.\nHe had the most success with his company Trelleborg Tax Free Shopping, which helped customers reclaim VAT.\nBecause of its success, he expanded to other European countries and changed the company’s name to Europe Tax Free Shopping.\nIn 1999, the first private equity investors got on board, and global expansion began.\nIn 2001, the company, now called Global Refund, moved to Switzerland, where it began facilitating currency transactions.\nIn 2012, the company came into the hands of Silverlake, another private equity investor, and Swiss tech investor Partners Group stepped on board.\nVeteran Per Stettenberg had to step down after 25 years for new top executive Jacques Stern, who changed the name to Global Blue Holding AG.\nAfter the initial lockdown, Silverlake felt the time was right for the IPO, which took place in August 2020. <\/p>\n\n

IPO<\/strong><\/h2>\n\n

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.\nThe IPO value came to $2.6 billion, double what Silverlake had put down in 2012.\nOne of the new investors who climbed on board was Ant Group, Alibaba’s fintech subsidiary.\nLast 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.\nTencent is the second shareholder with over 9%, Ant group is third, while Thomas Farley and Partner Group both own just under 2%. <\/p>\n\n

Current business<\/strong><\/h2>\n\n

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

    \n
  1. TFSS <\/strong>is by far the most important division, contributing \u20ac229 million and accounting for 70% of group revenue.\nThe division applies a 30% rate on recovered VAT.\nRelationships with some clients go back more than 20 years and earlier this fiscal year brought in Bottega Veneta, Audemars Piguet, Lacoste and Karl Lagerfeld.\nMore than 80% of sales come from Europe and the remainder from Asia, while the first steps have been made in Latin America.\nMost sales come from American, Russian and especially Chinese tourists buying luxury goods in EU countries. <\/li>\n\n\n\n
  2. The most important part of AVPS <\/strong>is Dynamic Currency Conversion (DCC).\nIn stores and restaurants with DCC, foreign tourists can automatically pay in their own currency.\nIt is widely used at tourist attractions and airports.\nTurnover last year was \u20ac62 million with which the division supplied 20% of group sales. <\/li>\n\n\n\n
  3. RTS <\/strong>is made up of a number of fintech acquisitions active in e-commerce and omnichannel distribution.\nThese include exclusive delivery, return delivery and digital receipts.\nThe new division’s revenue contribution is only 6% but grew 65% last year, 39% of which came organically.\nRTS has a collection of majority interests that could be acquired thanks to its partnership with CK Opportunities Fund.\nAs part of the partnership agreement, the fund invested $180 million in preferred shares of Global Blue and $45 million in common stock.\nThe preferred shares provide a 5% cumulative dividend and are convertible into 21 million common shares.\nIf CK Opportunities were to convert, it would become the second shareholder with a 13% stake. <\/li>\n<\/ol>\n\n

    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.\nThey are based in the town of Nyon on Lake Geneva, from where 1,800 employees in 40 countries are managed.\nThe company serves more than 300,0000 stores, hotels, restaurants and banks. <\/p>\n\n

    Results development<\/strong><\/h2>\n\n
    \"\"<\/figure>\n\n

    The bar chart above shows the impact of the lockdowns well.\nThe 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.\nRevenue grew by 50% and adjusted EBITDA by 130%, although growth weakened somewhat in the last few months.\nThe 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. <\/p>\n\n

    \"\"<\/figure>\n\n

    Strategy<\/strong><\/h2>\n\n

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

    Balance<\/strong><\/h2>\n\n

    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+.\nIn September, the company had \u20ac729 million in long-term debt, of which, after deducting the cash position, a net debt position of \u20ac568 million remained.\nDue 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 \u20ac50 million due to higher interest rates.\nIn November, a \u20ac610 million loan was taken out for seven years at euribor plus 5%, which is now effectively over 8%. <\/p>\n\n

    The ratio of net debt to ebitda must return to 2.5x, which is projected to be achieved by March 2025.\nFor fiscal year 2023\/2024, management expects to achieve adjusted ebitda of \u20ac125 – \u20ac145 million and for fiscal year 2024\/2025 more than \u20ac200 million.\nThus, net debt only needs to fall \u20ac62 million to meet the target, which can easily be achieved from free cash flow. <\/p>\n\n

    Rating <\/strong><\/h2>\n\n

    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.\nThat 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.\nThe 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.\nAnother private equity investor recently paid \u20ac1.8 billion for its much smaller competitor Planet Payment, even though that company generated revenues of only $50 million in 2019. <\/p>\n\n

    Conclusion<\/strong><\/h2>\n\n

    Global Blue is not a small player, yet Wall Street has paid little attention because its marketability is low.\nOnly Deutsche Bank investigated the company and came up with a price target of $8 in September, which was lowered to $7 in November.\nInvestors 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.\nBy 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.\nAfter all, it is also not for nothing that Chinese tech giants Alibaba and Tencent are now among the major shareholders. <\/p>\n\n

    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.<\/em><\/p>\n\n

    Important date<\/span><\/strong>Feb. 23: presentation of third quarter FY2023\/2024 results Fundamentals Global Blue<\/span><\/strong>Name: \nGlobal Blue Holding AG<\/a>Stock Exchange: NYSE Ticker: GBISIN: CH0562152865Ticker warrants: GB.WS (08\/25 @$11.50) 52-week high: $7.60Lowest rate 52 weeks: $4.01Price at time of writing: $4.25Number of shares: 230 millionStock market value: $1.04 billionEnterprise Value: $1.65 billionAdjusted 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: <\/a>ir.globalblue.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    Visitors from outside the EU who have made purchases within the EU can reclaim the VAT they paid when they leave the EU again.
    \nThe process of reclaiming seems complicated so many tourists balk at it.
    \nThis company facilitates VAT reclaim by acting as an intermediary between consumers, retailers, customs and tax authorities.
    \nResults suffered greatly from corona when travel was down.
    \nSales have since recovered, but not yet the stock price.
    \nManagement is initiating new, high-value fintech activities and has the backing of reputable investors. <\/p>\n","protected":false},"author":1,"featured_media":46067,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[253],"tags":[40],"class_list":["post-54612","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analyse","tag-premium"],"acf":[],"_links":{"self":[{"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/posts\/54612","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/comments?post=54612"}],"version-history":[{"count":1,"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/posts\/54612\/revisions"}],"predecessor-version":[{"id":61271,"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/posts\/54612\/revisions\/61271"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/media\/46067"}],"wp:attachment":[{"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/media?parent=54612"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/categories?post=54612"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/devwp1.websiteserverhost.biz\/sharesunderten\/wp-json\/wp\/v2\/tags?post=54612"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}