Seguimiento y opiniones de Brembo (BRBI)

Abro hilo para seguir a Brembo. Compañía cíclica y con una valoración interesante. Os dejo con un research de MPE Capital

 

Another new addition to the portfolio is Brembo S.p.A., an Italian manufacturer of brake calipers  and discs. Brembo was established in 1961 by Emilio Bombassei, the father of the current  chairman Alberto Bombassei. An automotive supplier is not usually a company I would invest in 

due to how cyclical the industry is, but Brembo is an exceptional business with a highly  differentiated offering. They have earned an average return on equity capital of 20% over the last  ten years, and even generated positive operating income during the global financial crisis. 

They are a supplier to all the leading automotive original equipment manufacturers, including  Ferrari, Daimler, Aston Martin, Tesla, and Volkswagen. The majority of premium automobiles  have Brembo brakes. They also supply to commercial vehicle and motorcycle manufacturers.  Brembo is also a large supplier of brakes to racing cars, including Formula One. 

I believe their main competitive advantage is economies of scale. Their high market share and  high plant utilization rates allow them to leverage fixed costs over millions of units. They are  also able to leverage their research and development spend over many units, allowing them to  create superior products. They also have plants all over the world, giving them the ability to  manufacture parts very close to their customers. 

This combination of superior product and lower  relative cost is what allows them to enjoy multi-decade relationships with many leading  automotive original equipment manufacturers. Brembo’s close relationship with racing teams  also allows them to stay on the cutting edge of technology. 

The Bombassei family are large shareholders (53% of the shares outstanding) and Alberto seems  very passionate about the business his father founded. He is very much focused on pushing the  envelope with regards to brake technology. 

Due to the fact that the business is cyclical, valuation becomes a little more difficult. The  business has very little debt and plenty of liquidity; they should have no problem weathering a  steep decline in the production of new autos. I’m forecasting mid-single-digit growth rates over  the next five to ten years and returns on incremental capital of 20%. I think an intrinsic value of  around €12 per share seems very reasonable, and we purchased shares at a healthy margin of  safety to that number.