The Q2 numbers beat expectations in pretty much all sectors within the group. The outlook, however, was subdued, also in pretty much all sectors – as has been the story for the last couple of years.
- Wallenius Wilhelmsen Logistics (WWL) reported a 16% increase year-on-year in adjusted EBITDA.
- Half of the promised synergies have already been confirmed in WWL, ahead of schedule.
- WMS (Maritime) is back on track with EBIT-margins above 10% after a brief dip below 6%. EBITDA beat expectations but were down 21% year-on-year.
- The equity ratio is at 77%, up from 55% (no real change, new accounting method). If the investment in Drew Marine gets financed 100% by debt this figure will fall to 67%, which is still very solid.
Now that the daugther company (WWASA) has merged into WWL and the mother company (Wilhelm Wilhelmsen Holding) no longer has a controlling interest above 50% the accounting method has changed. Why do I mention something as silly as an accounting change? Because it changes the visibility of the risk for investors. As mentioned in my video in May of 2016 the “real” equity number was always in the 70s, as the mother company was never liable for WWASA’s debt. (As a sidenote, the high equity ratio is a major reason why I have dared to size up on this investment and make it my biggest position.)
Current discount to NAV – 38%
My estimate of the fair value sits at 324 NOK per share, which equates to a discount to NAV of just north of 38% from the current share price. Since margins for WMS have improved I have made a slight adjustment upwards compared to Q1. Here is the updated Excel sheet: wwhq22017