Thursday, May 22, 2014

Seeking Alpha: Semperit Offers Real Value In Obscurity

You might not think there would be all that much to like in an obscure Austrian manufacturer of rubber and plastic products, but Semperit (OTC:SEIGF) (SMPV.VI or SEM.VI) is definitely a case where investors should take a much closer look. Rubber gloves, industrial hoses, and conveyors may not sound like attractive markets, but Semperit has managed to generate double-digit returns on capital and respectable margins on a pretty consistent basis. Semperit shares appear to be at least 10% undervalued on a low-ball EV/EBITDA basis, while a DCF model suggests a fair value over 35% higher than today's price.

Semperit is going to be a little more challenging to buy than the average stock. The company offers ample information in English, but the ADRs are not at all liquid. While I normally have no problem turning to a company's home European market when U.S. liquidity is insufficient, the average volume in Vienna is scarcely better with an average volume of less than 8K shares per day. I certainly believe some of the value here is a byproduct of the illiquidity and investors have to appreciate the risk that a speedy entry/exit with no slippage may be difficult.

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Semperit Offers Real Value In Obscurity

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