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4Moin together,
I have recently jumped on the $DNORD (+0%) train recently. So far I am also quite happy with it.
Now to my questions:
Take money with me?
Or wait until there is the next dividend (whenever that will be) and then look further?
Greeting Aah91
Not too much has happened in the portfolio in June - you can find the corresponding blog post here:
https://www.valueinvestments.ch/vermoegensverwaltung-value-und-momentum-juni-2023
All important points I post of course for you directly here on Getquin:
In June 2023, the portfolio recovered a bit: the return in the Value and Momentum portfolio increased by 0.8%, to 12.4%. In May, it was still at 11.6%. The return is at 49.6% since the start.
Sales and purchases in the portfolio
This month, I sold the Danish shipping company Dampskibsselskabet NORDEN $DNORD (+0%) sold. The price gain of 37.1% was already very good. The high dividend payouts did the rest and made the profit rise to an incredible 70.6 % - within a single year. It is only thanks to such companies that the yield has been maintained in the portfolio. Now one may ask: Why on earth sell such a good company? The quality is still good and the valuation cheap. Unfortunately, the company has lost a lot of momentum: Just two months ago, the price of the shares was 50% higher. Nevertheless, thanks to the favorable entry point and high dividends, the company has helped the portfolio with a nice profit.
This month, only one company has been added to the portfolio. This is mainly because I decided to hold the Italian company SARAS $SRS from the commodities sector for one more year in the portfolio and not to replace it: It still has rock solid fundamentals, high quality and positive momentum. A new addition to the portfolio is Hovanian Enterprises $HOVVB a company from the US real estate sector. Obviously, despite high interest rates, there is an undersupply in the US in the single-family housing sector, which is meeting with high demand. As a result, precisely these companies are showing very good figures and can still be had at a low price, because probably no one expected this in such an interest rate environment.
News and developments on the stock market worldwide
In June, the stock markets were reasonably quiet. Inflation concerns have eased somewhat, but expectations of further interest rate hikes, especially in Europe and the USA, remain. However, some of this seems to be priced into stock prices.
Recent talks between U.S. Secretary of State Blinken and Chinese President Xi Jinping, as well as the latter's foreign minister Qin Gang and top diplomat Wang Yi, have been positive. At least the two parties are talking to each other again, after it looked more like escalation in recent months. I hope the parties will find a peaceful solution to the various conflicts of interest. Because it should hopefully be clear to everyone after the war between Ukraine and Russia that neither party actually benefits from it. There are enough unresolved issues between China and the U.S., from territorial claims to the long-simmering trade conflict.
A better relationship between the two great powers could help ease the tension in the stock market. The removal of trade restrictions often leads to lower costs and could curb high inflation somewhat.
After many valuable feedbacks I tried to take your tips and wishes to heart. I have invested many hours in this new article. Not only was I on site for you in Switzerland - more precisely in the Bernese Oberland at Jungfraubahn Holding AG, but I also tested their shareholder offering and wrote a detailed experience report. However, since we here in the community are mainly interested in the investment side as well, I will focus here mainly on the financial aspects and some carefully selected financial ratios. I hope you like the report and am open to your feedback. A special thanks goes to @Lorena for tips after my first attempt here at getquin - I hope it turned out a bit better this time - more detailed it definitely is ;)
In-kind dividend Jungfraubahn 2022:
Dividends in kind are a popular way for companies to offer something special to their shareholders. A shareholder gift is ideal to strengthen the emotional bond between the company and the shareholders. In addition, it is a good and inexpensive way to advertise on your own behalf to an audience that is often already positively disposed towards the company.
In 2022, Jungfraubahn Holding AG shareholders received a voucher for a discounted trip to the Top of Adventure: from Grindelwald to the First and back. In addition to beautiful alpine panoramas, the trip to the First offers many action-packed activities. In this article, I briefly introduce Jungfraubahn Holding AG. As an asset manager, I have of course also prepared some selected key financial figures of Jungfraubahn Holding AG as simply and clearly as possible.
Jungfraubahn Holding AG is a tourism company and a mountain railroad company in Switzerland. Jungfraubahn have a monopoly position in the region of Jungraujoch in the Bernese Oberland. Especially famous is the railroad connection to the Jungfraujoch as the "Top of Europe". The destination is often visited by tourists from all continents, for the typical Swiss experience with the Alps and idyllic mountain villages. Jungfraubahn Holding AG has a total of eleven subsidiaries. These operate excursion railroads and winter sports facilities. They also maintain a rail service from Interlaken to Lauterbrunnen and Grindelwald. Jungfraujoch - Top of Europe - is the most profitable segment of the Group. The Mountain Experience segment comprises destinations in the vicinity of the Jungfraujoch. The other business segments comprise a wide range of services that support the business of the main segments. Such as the activities around the First - Top of Adventure: With the Flyer, Glider, Mountain Cart and the Trottibike - yes I have also tested all these activities ;)
The shares of Jungfraubahn Holding AG:
The last two years were not easy for Jungfraubahn Holding AG. Due to the Corona pandemic, Jungfraubahn also had to close on Saturday evening, March 14, 2020. The share price was just above 176.- Swiss francs in January 2020. As an asset manager with a heart for value investing, I could not resist: On March 16, 2020, I received the shares of Jungfraubahn Holding AG for 97.30 Swiss francs. Already on November 9, 2020, I was able to sell them again for 124.80 Swiss francs, which corresponds to a return of 28.3%. Taking into account that the holding period was just 238 out of 365 days, this even corresponds to a return of 43.4 % per year.
Despite the high return, I kept some of the shares. Since then, I have received a dividend in kind every year in the form of a shareholder offer with a friendly invitation to the beautiful Bernese Oberland. This is also the only dividend I have received since my purchase in 2020, because Jungfraubahn Holding AG has refrained from paying dividends since Corona broke out. In my opinion, this is quite sustainable and sensible in this situation. In 2019, a dividend of 2.80 Swiss francs per share was still paid out, which corresponded to a rather low payout ratio of 30.8%.
Today, on June 5, 2022, the share price is 139.40 Swiss francs. On my purchase price of 97.30 Swiss francs, this is still a 43.3 % return. Considering the holding period of 2 years and 44 days, my return is 18.5 % per year for the remaining shares. If you compare the annual return, the buy & hold part of the shares has not paid off so far. The question is, in times of Corona and the war between Russia and Ukraine and inflation concerns, would you have gotten more than 18.5% return with other stocks? For the sake of simplicity, I have omitted the dividend in kind in the form of the shareholder offering from this calculation.
Key figures Jungfraubahn Holding AG:
In this section, I want to show you the investment side. I have collected some key figures, which in my opinion are suitable to get a first picture of Jungfraubahn Holding AG - but of course not for a final analysis. With my value and momentum strategy, I work daily with exactly such key figures, among others.
Jungfraubahn Holding AG ISIN: CH0017875789
Country: Switzerland
Value key figures
Price-to-book ratio:1.3 i.e. fairly valued
Price-earnings ratio: n/a because no profit was generated in 2021
Price-to-sales ratio: 6.7, i.e. highly valued
EV/EBITDA: 22, i.e. highly valued
Price/cash flow ratio: 19, i.e. highly valued
Return to shareholders: 0.35% i.e. low return
Why these value ratios of all things?
The fundamentals of value investing are reasonably clear: value investors look for undervalued companies to invest in. This often involves a quantitative and a qualitative analysis. But when it comes to actual implementation, there are a variety of approaches. I think it is dangerous to focus on one ratio, such as the price-earnings ratio or the price-book ratio, and make the investment decision dependent only on these quantitative factors of company valuation. Here, it seems to me that combining valuation ratios makes sense - such as with O'Shaugnessy's Value Composite. In my opinion, such long-term studies are worth their weight in gold and are also meaningful. He analyzed various value ratios over a period of 45 years, from January 1, 1964 to December 31, 2009, in order to find out which value ratios can be used to select companies in order to achieve the best returns. This resulted in the so-called Value Composite, which is a combination of these value metrics. He tested this combined valuation ranking for all rolling 10-year periods over the 45-year period between 1964 and 2009, and found that it outperformed companies that were undervalued on a single valuation metric 82% of the time - but not if you also looked at the other valuation metrics.
Profitability
Return on Assets (ROA): Annual loss of CHF 0.5 million
Cash flow / ROA (CFROA): operating cash flow CHF 40 million
Change in ROA: ROA improved from -0.0133 to -0.0005
Quality of earnings: CFROA is higher than ROA
Financing
Change in debt: gearing increased from 0.083 to 0.107
Change in working capital (liquidity): Liquidity ratio 3 increased from 0.38 to 0.45
Change in shares issued: number of shares decreased from 5.83 to 5.82 million
Efficiency
Change in gross margin: Gross margin decreased from 17% to 13
Change in asset turnover: Asset turnover decreased from 16% to 13
Piotroski F-Score: 5
What is the Piotroski F-Score all about?
The Piotroski F-Score provides an initial assessment of a company's profitability, financing and efficiency. It can be traced back to Joseph D. Piotroski, a professor of accounting. In 2000, he wrote a research paper entitled "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers."
His findings exceeded his most optimistic expectations:
Buying companies that scored the highest 8 or 9 on his nine-point scale, or F-Score, as he called it, resulted in an average excess return of 13.4% over the market over the 20-year period from 1976 to 1996.
Conclusion: Jungfraubahn Holding AG
Jungfraubahn Holding AG does not appear to be massively overvalued or undervalued at the moment. In terms of profitability and financing, Jungfraubahn Holding AG appears to be stable. However, efficiency leaves something to be desired. This is of course also due to the special effect of the Corona pandemic, which hit the tourism sector particularly hard.
Value Composite
Jungfraubahn Holding AG has a value composite of 54, which means that the company is fairly valued.
Piotroski F-Score
Jungfraubahn Holding AG has an F-Score of 5, which corresponds to the typical financial situation of a stable company.
Would I buy the Jungfraubahn Holding AG share today?
Yes, because I regularly visit the region in the Bernese Oberland with its picturesque mountain scenery. Then I'm happy to own a part of all these railroads and operations - but that has more of an emotional component for me.
No, because rationally I find the returns in the past okay, but not excessively high. The valuation at the moment seems fair or even rather high - depending on which key figures I give more weight to. There are more profitable companies that are cheaper to buy and have positive momentum.
Unfortunately, the possibilities of presentation are limited here, but that is also okay. You can find a clear presentation incl. tables with further tips & experiences on shareholder value in my blog post:
https://www.valueinvestments.ch/verm%C3%B6gensverwaltung-value-und-momentum-rebalancing-mai-2022
When managing assets for my clients, I look for a combination between low valuation and high momentum. My current portfolio in the asset management of Estoppey Value Investments can also be found in the blog under the latest rebalancing:
https://www.valueinvestments.ch/verm%C3%B6gensverwaltung-value-und-momentum-rebalancing-mai-2022
I hope my contribution to this year's shareholder offering of Jungfraubahn Holding AG has one or the other new info with it & am curious about your feedback.
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