market folly

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


Be sure to check out the rest of the Sohn San Francisco 2018 presentations.