market folly

We're posting up notes from the Sohn London Investment Conference 2015.  Next up is Franck Falézan of Primestone Capital who pitched a long of Dorma Kaba (SWZ:DOKA).


Franck Falézan's Sohn London Presentation 2015

Long Dorma Kaba Holdings (SWZ: DOKA) 

Primestone is a constructivist Activist that brings private equity experience to bear. It focuses on good businesses that can be improved.

Dorma Kaba Holding is a Switzerland-based company engaged in the provision of security systems  - locks, cylinders, hotel security, door closers. It is the No. 2 provider of security solutions after Assa Abloy.

Reasons to like DOKA:

- The security industry is an attractive sector with high margins that are often above 20%. It’s recession resilient. It is characterized by growing markets driven by urbanisation and the need to produce ever more effective security systems. There has been a shift from mechanical to electronic locks – lots of mechanical locks still need to be replaced. Local players have an advantage as government safety standards vary from country to country requiring different products.

- DOKA has a strong position within the industry. Good brands. Architects and security advisers tend to be brand conscious.

- There are multiple ways management can create value. The pieces are beginning to fall into place and he price is still appealing.  DOKA is a good business but it could be improved in several areas.

- Operations: margins should be increased from 16% to come in line with their main competitors that achieve 21%

-Strategy: more growth through acquisitions is required

- Balance sheet efficiency: there is cash on the balance sheet and no debt. DOKA needs to re-lever.

- Management need incentivising: they do not own enough equity and should be paid a larger percentage in shares.

- There is room for consolidation in the market. The market leader Assa Abloy only has 17% of the global market.


Be sure to check out the rest of the Sohn London Conference presentations.