Thales Action Forum

Buy company shares?

Hello, I have the opportunity $HO (+0,39 %) to buy shares at the conditions mentioned below.

However, I am not sure, as I also see certain disadvantages:

• There is also a monetary advantage
• Shares are held at Society General in France (later transfer to own securities account in Germany is not possible)
• Tax issues (dividends and subsequent sale are not automatically taxed with capital gains tax)
• Shares are probably blocked for 5 years (was the case in the past)
• Thales $HO (+0,39 %) is a defense company and has therefore done well in recent years (who knows what it will look like in 5 years).

What would you do here?

Yesterday I posted about Thales and Rheinmetall. I found these companies interesting for reasons I mentioned in the post. This morning I got up early to do a DCF valuation.

In this case, I only did the calculations for Thales in this case. $HO (+0,39 %) For anyone who is interested, I will give you an insight into my calculations. First of all, I would like to mention that my calculations were made for the next five years.

The following figures are taken directly from the Thales 2023 financial report.

STEP 1: I used it to calculate the projected free cash flow.

• Free operating cash flow: 2.026 million.

• Expected organic sales growth for 2024: +4% to +6%. We use a conservative growth rate of 5% for our forecasts.

• I assume that a similar growth rate will apply for the next five years.

• For 2028, I have calculated a growth rate of 4% to take into account a possible slowdown in growth. I have done this to minimize the risk of overvaluing the company.

STEP 2Then I calculated the Terminal Value (TV) based on the Gordon Growth model.

STEP 3: For this I needed the WACC.

The following assumptions were made:

• Cost of Equity (Re): 8% (typical for moderate risk companies).
• Cost of Debt (Rd): 4% (taking into account current debt levels and interest rates).
• Equity ratio: 63.5% (equity/total capital).
• Debt ratio: 36.5% (debt/total capital).

I have calculated a WACC of 6.14 %.

STEP 4Discounting the cash flows and the terminal value to the present value (PV)

We know that the terminal value is 62,823.57 million.

The present value can be calculated by dividing the terminal value by (1 + WACC)^5 (five years into the future).

This results in a value of EUR 46,577.52 million.

STEP 5Total present value (TPV) and fair value per share.

By calculating the sum of the present values, we obtain the total present value (TPV): 55,484.52 million.

Now to the climax!

We can finally calculate a fair value per share by dividing the TPV by the number of shares outstanding.

There are about 215 million shares outstanding.

55.484,52 / 215 = 258,04.

This is the share price I calculated for Thales and should also be the fair value per share, using the conservative growth rates of 5% for the next five years.

With a current share price of just under € 147, I think this share is undervalued and have therefore placed a buy order with my broker. I note that a five-year period is also linked to the European elections (every five years) and the points I mentioned in my earlier post about increasing military budgets.

Thank you very much for reading!

Hello folks!

Since I would like to receive many reactions to this topic, I will write my first post in German on this platform.

Yesterday I responded to a post about defense shares reacted. The post was about reducing the percentage of defense stocks in the portfolio. I responded as follows:

"In my opinion, you have to look at the bigger picture. Regardless of who is elected to office, there are already two major conflicts right on Europe's doorstep. Firstly in Ukraine, but also in Israel and the Middle East. The balance of power is shifting worldwide. China and Russia are once again gaining in importance. Terrorism in our regions, but also in Africa, is on the rise again. As a result, state leaders around the world are rearming their organizations. Just look at Mark Rutte's inaugural speech at NATO, full of explicit references to the expansion of military budgets."

After my comment, I did some more research on defense stocks.

I came across a Dutch article titled: "The 2 best defense stocks that keep growing because of the wars" by the Dutch investor Rabi Safi.

He wrote about Europe's willingness to significantly expand its military budgets and why this will benefit these two companies in particular (Thales and Rheinmetall) in particular would benefit. $HO (+0,39 %) and $RHM (+1,63 %)

Other positive reasons for these European companies were that Europe wants to become more militarily independent of the USA and that companies such as Thales and Rheinmetall are reporting record orders.

The author also mentions Mario Draghithe former Prime Minister of Italy and ex-President of the ECB, who is calling on European leaders to drastically increase military budgets.

More on the alarming reality of escalating conflicts near us: Russia recently announced plans to recruit more than 180,000 new soldiers, bringing the activebringing the total active armed forces to around 1.5 million.

In my further research on Rheinmetall I learned that their military exports have increased by 30 %. EBIT is also at its highest level ever. The CEO of Rheinmetall, Armin Papperger, expects the company to grow by over 2 billion annually over the next few years.

Finally, I would like to provide more insight into what the impact might be if Kamala Harris were elected to office.

Should this happen, the analyst of this article expects more turbulence and uncertainty in the world and thus on the markets. Other leaders may see them as too inexperienced and act more aggressively. However, one thing is certain: Europe will have to increase its military spending, especially in this case.

What do you think about this issue? Are you considering investing in defense stocks? If so, which companies do you have in mind?

Thank you very much for reading!

+++ Armed Forces Day +++

Exciting insights into the everyday life of the soldiers and interesting discussions about the air defense missile system-PATRIOT as well as the self-propelled howitzer 2000. 🗣️💬

At the end, there was even a demonstration of paratroopers jumping out of an A400M. 🪂🛫

I was very surprised at the reaction of many people and the comments about the self-propelled howitzer 2000. Mostly negative.

To add another comment on the war in Ukraine (Personal opinion).

After explaining how the Patriot air defense system works, what effect and influence it has, what radius it can protect, I understand Ukraine's desire for more such weapons.

The system can perfectly protect civilian infrastructure. 💣🧨

$RHM (+1,63 %) / $AIR (-1,42 %) / $RTX (+3,63 %) / $HAG (+2,31 %) / $LMT (+3,53 %) / $HO (+0,39 %) / $BA (+1,21 %) / $NOC (+1,36 %)

Thanks to the @Der_Dividenden_Monteur for the nomination in the series Exchange-traded companies in everyday professional life.

I (still) work in the construction industry for Deutsche Bahn. 🛤

My typical workday starts with a walk to the company car, a $F (+0,87 %). If I'm not talking on my employer's $SMSD (+0,89 %) cell phone ☎️ of my employer, I like to listen to podcasts or audiobooks about $SPOT (+0,87 %). However, this is only via my personal phone from $AAPL (+0,65 %). 📱

Since the distances to the railroad construction sites in Germany can be very long, I have to refuel every now and then, of course. With the fuel card it goes then to Aral, which as you know a company of the $BP (-3,21 %) is. Recently, however, one can also fill up at $TTE (-1,72 %) fill up. ⛽️

Work equipment includes the $TOSYY laptop 💻 and Office365 from $MSFT (+0,15 %) 📧. On the construction site itself, of course, the personal protective equipment (PPE), partly from $MMM (+1,14 %), cannot be missing. 🦺

My job is to coordinate the various companies on large construction sites. The rails come from $VOS (-1,29 %), the signaling technology from $SIE (-2,51 %) or $HO (+0,39 %), $HON (+1,7 %) manufactures track vacancy detection systems, to name just a few examples. All kinds of construction companies are of course also bustling about on the construction sites: e.g..$STR (-2,02 %), $BFLBY or $HOT (-1,48 %).

For a good coffee ☕️ or a burger 🍔 it goes now and then to $MCD (+2,19 %)if there is a branch in the vicinity. Unfortunately, it is all too often the gas station Bockwurst or the brought stulle. If the workday is really long, it also goes times in the supermarket to a can of $SBUX (+2,49 %) or $MNST (+1,28 %) to buy.

I nominate @godividend and @tim1 in the hope that they haven't had their turn yet.

#boersengehandelteralltag