3i Share Discussion Threads

[riverman77] 19/5/2022 13:14

Costco and Dollarama are both on EV/EBITDA multiples in the 20s, versus Action on 18.5. However, I would argue Action is much higher quality business than either of those. The UK discounters are a lot cheaper but they have limited growth prospects and lots of competition.

[roguetraderuk] 19/5/2022 13:10

also id add, action is going to grow its revs over next few years. the likes of bme will be at best around flat until 24. that said bme is getting into the realms of interest now. if not for the fast mkt you could probably call it soon. but the speed of the decline prior to a bounce means it could easily see 4 pounds.

[roguetraderuk] 19/5/2022 13:08

right EI, if you apply a discount down to 12 times or so it gets you to about 900-1000. i have no position presently, which i mightly regretted until today, but i expect i will not be able to build back at the valuations i want, but hope to get at least back into underweight in it. if we can down down in the states today again and stay down into the close, i think you might be able to pick up a few things tomorrow 3i being one of them.

[essentialinvestor] 19/5/2022 12:57

I don't want to labour the point but their Action valuation looks high.


Show me another mass market retailer that is currently valued by the stock market
at the same multiple 3i give Action...?.

[chc15] 19/5/2022 12:53

Agree, though it is still quite high alpha. But this is a crazy drop, especially after great results. You can bet institutions are piling in today, so am i!

[riverman77] 19/5/2022 12:43

3i is completely different in almost every way from 2008 - different management team, different strategy and different companies. The portfolio is also pretty defensive now across the board - discount retailers, infrastructure and healthcare seem to be the main themes.

[essentialinvestor] 19/5/2022 12:26

Just checked the longer term share price to make sure my above post was accurate and
the GFC price decline was even more dramatic than I remembered - the 3i price
travelled from over £7 a share to Under £1.50.

[essentialinvestor] 19/5/2022 12:23

Back in.


During the last recession the 3i price was decimated, as was much of the wider listed
PE sector.


Are we saying..this time is different?.

Yes I am aware their holdings are.

[riverman77] 19/5/2022 12:15

From my brief research I couldn't see any obvious large competitors in Western Europe - most of the large discount retailers seem to be food based (Lidl, Aldi, etc). If that's the case they have a huge runway for growth (barely started in Italy and Spain, and still lots of room for growth in Germany and Poland).

[roguetraderuk] 19/5/2022 11:42

river, action is a bit like wilko pound shop b&m mixed into one. they dont do clothing but do confectionary toiletries and cleaning products. youve got cheap gardening gear some toys art products as well as some basic diy stuff. they tend to stock the same stuff but its not the typical stuff youll see at the supermarkets, they tend to have the lesser known brands or non brand.
i think one of the reasons they are staying away from the uk is the saturation and cost of doing business.

[chc15] 19/5/2022 11:39

Agree, different mkt. I have added at 11. 97.

[riverman77] 19/5/2022 11:23

I think the competitive landscape differs in Europe versus the US and UK. There are a lot of big discount retailers in US/UK but not aware that Action have any real serious competition, giving them scale advantages and barriers to entry, etc. Action also provided a trading udpate recently and didn't flag any of the issues that Target are facing (at least not to the same degree) reporting continued strong growth.

[jerseyman1] 19/5/2022 10:19

Thanks for providing plausible reason.....but in reality very different, geography, business maturity and model. Rebound once shorts have had their fun

[jonwig] 19/5/2022 10:16

Ah, that "Target".

[roguetraderuk] 19/5/2022 10:07

its been immune to mkt falls of late so just catching up on the back of walmart and target. the thinking being if they couldnt cope the others wont. 3i's action is more discount, more like b&m and its stores are in europe with a growing cee arm which is going to provide the growth going forward. its still not particularly cheap vs the mkt here but its never going to be, on average, given that action is a quality business and the rest of the 3i portfolio is away from the high flying sectors. i think you should be able to start buying these again soon.

[jonwig] 19/5/2022 09:53

Target Express? I thought that was sold in 2006.

[chc15] 19/5/2022 09:53

Bit savage, I'm adding.

[riverman77] 19/5/2022 09:41

Target I think

[jerseyman1] 19/5/2022 09:00

Why such extreme share price fall this morning?

[chc15] 12/5/2022 08:45

Great results on a very bad day, typical, but may add more here..

[essentialinvestor] 12/5/2022 08:33

Added a small amount and should have spotted the opportunity in March,
however continue to view their valuation of Action as too steep, particularly
given the significant de-ratings in the wider retail sector.


B&M sells on approx 11 x (I don't hold).

[jerseyman1] 12/5/2022 08:20

Astonishingly good results, and currently a NAV discount to share price Looks like this will widen today! Really happy to hold these shares for long term

[jonwig] 12/5/2022 07:40

FY results:

Total return of £4,014 million or 44% on opening shareholders' funds (March 2021: £1,726 million, 22%) and NAV per share of 1,321 pence (31 March 2021: 947 pence).

Our Private Equity business delivered a gross investment return of £4,172 million or 47% (March 2021: £1,936 million, 30%). This excellent result was driven by strong earnings growth and realisation profits with valuation multiple increases contributing just 6% of Private Equity GIR in the year.

Action delivered annual revenue growth of 23% and EBITDA growth of 36% in 2021 and has started 2022 well. Action's LTM EBITDA to P3 2022, which ended on 3 April 2022, was €932 million (31 March 2021: €602 million) showing the strength in recovery of the group's trading since the severe Covid-19 restrictions in the first three months of 2021.This strong performance underpinned value growth of £2,655 million in the year, in addition to £284 million of dividends received.

Div 27.25p, xd 17/06, pay 22/07. Total for year 46.5p.

A NAV discount: who'd have thought?

[chc15] 17/3/2022 18:30

I added when this dropped back, there's too much demand for this stock, it still fits the value, alternative and income portfolios.