And the next batch of randomly selected Swiss stocks, this time only identified a possible “watch list” Candidate.
I have to say that I really enjoy this type of research. After looking at 20 stocks so far, I have to say that the reporting quality is generally much better than German companies, regardless of the size of the company.
11. Varia US Proporties
Varia is a listed real estate company that only invests in US real estate with a market capitalization of ~ CHF 380 million. You appear to have a diversified portfolio of residential units. The company appears to be a “vehicle of return” with relatively large distributions but little increase in net asset value. Since I’m by no means a fan of publicly traded real estate, I will “consist”.
12. Lonza Group
Lonza is a CHF 42.3 billion group of chemists and pharmaceuticals with a large market cap. What makes the company interesting is the fact that its share price has increased 10 times over the past 10 years:
In 2020 the company achieved sales of ~ CHF 4.5 billion with an EBITDA margin of around 31%. So the stock is definitely not cheap. Lonza seems to make special ingredients for other companies, for example Moderna.
Interestingly, this 10x increase was achieved by a relatively moderate increase in EPS over the past 10 years:
According to their 2020 forecast, they plan to grow double-digit by 2023. Even so, the company looks fully valued with a trailing PER of around 60 or around 47 in 2023. Besides, I don’t know that much about the industry. Maybe they created unprecedented intellectual property, but I guess I won’t be able to judge so I will “consist”.
13. CPH Chemie + Papier Holding AG
CPH is a company with a market capitalization of CHF 370 million, active in the chemicals, paper and packaging sectors. Paper is the largest division and seems to be struggling. Chemicals seem fine, but packaging seems to be the “crown jewel” with increasing sales and high BEITDA margins (> 20%).
On the positive side, the company is debt free and reasonably priced (below book value). I found an interesting German-language article about the company that emphasizes that it is a “sustainable” player in the paper market.
The long-term chart doesn’t look too good, most likely due to the structural problems in the paper market:
At first glance, I like the fact that there seems to be a “hidden gem” in this otherwise very boring company.
The company is mostly family owned and doesn’t seem very well known. I’ll put them on top of mine “Clock” list.
14. Banque Profil de Gestion
This bank is a small asset manager with a market capitalization of CHF 32 million. When I started reading the annual report, I was quite surprised: the chairman explains that the bank is too small and that they need to merge to get the necessary size. They appear to be paying a special dividend and then merging with another bank. I didn’t quite understand when this happened, but I’m not too keen to dig deeper either, so I’ll do it “consist”.
15. Lindt & Sprüngli AG
Lindt is a company that doesn’t need much explanation. With a market capitalization of CHF 21.3 billion, the company is one of the larger Swiss companies. With a share price of around CHF 91,000, it is also one of the “most expensive” stocks in Europe. I think Lindt isn’t traded on platforms like Trade Republic as often …
In 2020 the company achieved sales of ~ 4.5 billion (-6% in CHF year-on-year). In previous years, Lindt had managed to grow in the mid-single-digit range every year. The EBIT decreased by ~ -30% year-on-year, the net profit by almost -40%. It seems that a significant part of Lindt’s business depends on physical retail (own stores, airports) that is not offset by online sales.
The share price is completely unaffected by the 2020 numbers, apart from a brief decline in March 2020:
Based on 2019 earnings, the stock is trading at around 45 P / E, which is significantly more than I’d be willing to pay. However, investors seem very confident that Lindt will recover quickly and return to single-digit growth. Even in the depths of the Covid crisis, the stock was not traded below 35x 2019 P / E. Unfortunately a “consist” to me.
16. Crealogix AG
Crealogix AG is a software company with a market capitalization of CHF 165 million that offers banking and asset management solutions. According to the semi-annual report, the company achieved sales of CHF 6 million of around CHF 50 million and was able to grow by 8%. Like many other software companies, Crealogix is trying to move to a SaaS model. Around 25% of sales are currently based on SaaS. The proportion of recurring income is ~ 50% in total.
On the plus side, the company has no debt. Unfortunately, the company is not very profitable with around 1 million EBITDA for the first 6M 2020/2021.
According to the report, they all cost R&D expenses, but the salary portion still indicates that their software appears to be quite custom-made.
The long-term graph shows that they never hit their IPO price as of 2000:
A 2014 article shows that they were already trying to transform themselves into a more profitable “platform” company then, but that didn’t work out too well. To be honest, I don’t know what should be different this time.
Although the SaaS story might be interesting, I will “consist” Yet.
17. Swiss National Bank
The Swiss National Bank is actually, as the name suggests, the Swiss Central Bank. Funnily enough, it’s not the only publicly traded central bank, the Belgian central bank is listed as I covered it in a blog article from 2012.
The SNB share is actually not a share, since the shareholders have no voting rights and no right to the company’s profits. It is more of a perpetual bond with a guaranteed dividend of CHF 15.
Since I wrote the post, the stock has risen more than five times as we can see in the graph, especially as of 2018:
I’ve never really followed up on why the stock rose so much, especially in 2018. Perhaps some investors believe they may get more than the dividend of CHF 15. Although the low interest rates have certainly driven some of the price hike.
Since everything can be assessed at the stratospheric level these days, I will be happy “consist” because I don’t want to be a perpetual bond with a yield of 0.2% in CHF for long.
18. Nebag AG
Nebag is a CHF 90 million market capitalization company that invests itself in small Swiss companies, most of which are publicly traded. They publish daily net asset values which is a big plus and explains why the company trades relatively closely on net asset value. You have some fairly concentrated positions in smaller Swiss companies.
They also pay significant dividends, averaging around 5% per annum of net asset value. However, there has been very little capital growth in recent years, as this graph on their website shows:
I think the company is worth following to learn more about Swiss small caps, but as an investment, I’ll make it clear “consist”.
19. Jungfrau Railway Holding
Jungfraubahn, translated as “Virgin Canle Car”, has a market capitalization of CHF 833 million. Another publicly traded cable car company that operates cable cars on mountains in Switzerland, including the famous Jungfrau summit. 2020 wasn’t a very good year for them, but in previous years they also showed a decent surge in activity.
The share price has recovered well from both a March 2020 low and a November 2020 low:
On the positive side, the company seems to have little debt and is quite profitable, having achieved an EBITDA of ~ 100 million in 2019 on sales of around CHF 220 million. Similar to BETT, however, I don’t really feel comfortable evaluating this type of company, as there is clearly a very important “real estate” factor to consider. If I didn’t have a day job and time to save, I’d love to dive deeper into a company like this.
Despite the fact that I really like the mountains and skiing, I will “consist” on the Jungfrau Railway.
20. Bank Linth AG
Bank Linth is a CHF 495 million local bank that I had never heard of before. The majority of the bank is owned by the Liechtenstein Central Bank. At first glance, the bank looks solid, but not very exciting. They trade close to the book value and achieve an ROE of around 5% with little observable volatility. The return on sales has been shrinking for some time, but very little write-offs allow the bank to maintain profitability.
From the outside, this looks more like a utility company than a bank. Still a “consist” to me.