We’re posting up notes from the Sohn San Francisco 2018 investment conference. Next up is Alex Gleser of TPG Public Equity Partners who pitched a long of Philips (PHG).
Alex Gleser’s Sohn San Francisco Presentation: Long Philips (PHG)
• Portfolio has transformed dramatically with spin off of lower margin lighting business and sale of TV/electronics businesses (Went from a diversified conglomerate to a healthcare and personal care company but market still not viewing the company with the right lens)
• Attractive secular growth ( End markets growth at 7%, have #1 or #2 share in their major categories)
• Significant margin improvement opportunity (Diagnostic imaging is primarily where their margins lag and ability to increase their margin here; See 600 bps of margin improvement potential across the segments of the company; Management contemplating 100bps/year of expansion from 2017-2020)
• Management has delivered hitting organic growth targets of 4-6% and 100 bps margin expansion over the last year
• Attractive valuation: Trading at 9.2x EV/EBITDA – lower than peers
• Some optionality in other part of the business
• Strong balance sheet provides a nice margin of safety
• Attractive secular growth ( End markets growth at 7%, have #1 or #2 share in their major categories)
• Significant margin improvement opportunity (Diagnostic imaging is primarily where their margins lag and ability to increase their margin here; See 600 bps of margin improvement potential across the segments of the company; Management contemplating 100bps/year of expansion from 2017-2020)
• Management has delivered hitting organic growth targets of 4-6% and 100 bps margin expansion over the last year
• Attractive valuation: Trading at 9.2x EV/EBITDA – lower than peers
• Some optionality in other part of the business
• Strong balance sheet provides a nice margin of safety
Be sure to check out the rest of the Sohn San Francisco 2018 presentations.
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