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Wonder, Wealth & Abundance

Rounded Bottom : Vente-Unique.com

with one comment

https://www.investopedia.com/terms/r/roundingbottom.asp

I like rounded bottoms.

Jokes aside, there is an under-the-radar Ecommerce company called Vente Unique, based in France, sells Furniture in 11 European countries. I added it in the portfolio 5 months ago. It has been profitable since the very first year of operation, an unusual feat, in an industry where making losses and bleeding the competitor is the norm. CAGR of revenues and profits in its history has been in double digits.

It gives a 2% dividend yield as well, remarkably attractive in a continent which has maximum negative interest rates assets. After COVID the pace of growth has accelerated. This quarter the growth was 63% https://bourse.vente-unique.com/pdf/cp/20210210_ca_t1_2021_en.pdf

It gets better, the company is buying back shares as well.

The only problem with the company at the moment is the market cap which does not allow large funds to participate. The leader in the US is Wayfair – 30 Billion$ market cap (https://finance.yahoo.com/quote/W?p=W&.tsrc=fin-srch), the leader in Australia is Temple and Webster (https://finance.yahoo.com/quote/TPW.AX?p=TPW.AX&.tsrc=fin-srch Disclosure: Also invested in Temple and Webster since the last year)

Much slower growing online furniture companies like Westwing Germany (900 Million Euro Market Cap) are trading at 3 times revenue. Market Leaders (Wayfair, Temple and Webster) are trading at 4-6 times revenues and 100 times earnings at market cap of 30 Billion USD and 1.3 Billion AUD. Temple and Webster has been a monster, a 100 bagger in the past 5 years.

Online furniture purchase is a very new habit of consumers, accelerated by COVID, not cracked by Amazon. If you remember Munger, the generalist magazines were beaten their brains out by specialist magazines. Same way in the next 10-15 years a website that has 50,000 styles of T shirt or Sneakers or Hiking Equipment and a bigger breadth and depth will be more attractive to customers than Amazon (a generalist). There are two businesses Amazon does not enter, large bulky furniture and 5$ knick-knacks.

If the market cap of Vente Unique were to quintuple overnight from 160 Million Euros to 800 Million Euros, it would be probably trading at fair price of 5 times revenues and 80 times profits. The company has proven that it can be profitable in all the markets it enters in the European Union. What is lovable about this industry is the its boring, stagnant and does not attract cream of the crop.

The opportunity of furniture sales in European Union alone is over 200 Billion $, Vente Unique’s revenues are currently 1/2000th of this pie, not two hundredth but a two thousandth. Remember Holiday Inn growing for decades at 25% in a no-growth-industry. There is much to be loved about a no growth industry (Peter Lynch’s investing pattern). This size of the industry implies the company can be 10x or 50x its current size and still have a long runway to grow.

Balance Sheet is spotless, if you exclude cash of 17 Million Euro from the Equty of 18 Million Euro, the ROE translates to 500% (5 Million $ profit on 1 Million $ equity).

There is, to my knowledge, for such a profitable operator, only one thing that can go wrong if the management doesn’t change. An EMP attack on Earth from Aliens resulting in prolonged electricity outage on the planet. Govts. across the world will have a bigger fish to fry than worry about Ecommerce or Crypto trading.

No institutional ownership and coverage on this stock. I can only say that this ecommerce operator is laughably cheap at 1 times revenues and 20 times earnings, even after going up 600% this year.

Good luck to all.

Written by amitdipsite

February 14, 2021 at 4:15 pm

Posted in Uncategorized

One Response

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  1. Sir, how to open trading account in France ?

    DINESH

    February 18, 2021 at 12:05 am


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