The Steppe Eagle OEIC Ltd on Signify N.V.
Thesis
Signify is framed as a turnaround and income idea in lighting, with annual sales of about EUR 6.1 billion and a dividend yield above 5% at the cited share-price range. The fund argues that the market valued the company at only about 0.4-0.45 times sales versus a usual and fair range of 0.6-0.75 times, while management is making the business leaner and more efficient. The long-term thesis also rests on Signify's push toward more efficient and greener lighting products. The manager expects the sales decline eventually to end and sees a slow recovery from roughly EUR21 toward EUR30. P(1) Harry Qelm Baabsman Steppe…
“At some point in time, the decline is expected to be over, and slow recovery must situate this business from 21EUR closer to 30EUR.”
Key risks
- Annual sales are declining
- The fund wants debt to remain at a lower level