ADL Partner: a SWOT analysis

Publié le 29 mars 2012 par tryingtobelikewarren

Hi,

I will begin my analysis of ADL Partner (ADLP) with a swot analysis.

ADLP is specialised in marketing services .It has a strong experience in the area of magazines.In other words the company is specialised in relatinship marketing. ADLP sets up, sells and puts in place services which enable to conquer, attract, animate and fidelize a customer base for itself or for it's partners (among which we can find banks,retail, services and e-commerce).

Strengths

a family business which tighlty manages costs and is prudent in its management with a long term approach.
an ability to focus on profitable business. The company took the difficult decision to sell the german subsidiary as the market was not profitable. ADLP shifted it's focus towards subscription's with no time limit and away from fixed term subscriptions.
good recent external growth operations (one concerns a minority stake (40%) in a start up focused on marketing on social networks and another was the acquisition of a company which has an online "eco-consumption" magazine). Both acquisitions concern areas which are at the center of everybody's interest.
A nice moat in France in the press magazine.
No debt both in 2011 and in 2010. Debts were paid off in 2010.
A good ROE (54,22% in 2011 and 48,05% in 2010) and ROTC (54,21% in 2011 and 44,63%) for the last two years
A very good dividend yield (1,10 euros of dividend in 2011 and 1,20 in 2010 in 2010 for a stock price which recently was around 13,50 euros which gives us a nice 8,14% yield. The yield was even better at one point when the share was at 10,50 euros... and unfortunately I didn't buy at this nice price, I guess I can improve my buying skills!!!).
Has the stockholders interest at hand as illustrated by the special dividend of 3,39 euros per share in 2010.
29,1 MEUR of net cash in 2011 against 23,9 MEUR in 2010
A net asset value of 27,1 euros per share in 2011 (company estimate).
No important Capex needs
An increase in the operating margin (10,2% in 2011 and 9,0% in 2010)
There has been a net profit for the last three years, even in 2009 which was a difficult year.

Weakness

Sales did not increase a lot (+1,66% in 2011, +0,3% in 2010 (which can be explained by the selling of the german operation and the reorganisation), + 5,08% in 2009. But I think that the company should be seeing some growth through its recent acquisitions and by the fact that its reorganisation is over).
Highly dependant to the french market but it should change a little bit with the recent acquisitions.
Magazine industry has to face an intense competition from the internet. But we can say that the company does not depend solely on this industry.
A small exposure to Spain which is facing a strong recession and customers could put off their expenses.
A decrease int the net profit on continuing operations (8,29 million euros in 2011 and 9,46 million euros in 2010)
The net profit margin is alright but it could be better (6,3% in 2011, 7,9% in 2010 and 2,28 % in 2009). 2009 was impacted by the liquidation of a company.
There are 20 stock option plans. Warren Buffett isn't a big fan of those !! I will keep a look on this point.

Opportunities

The growing importance of marketing on the internet and more especially on social networks gives nice growth opportunities.
The ability to expand to all the internet tools the knowledge acquired by ADLP for the last 40 years.
The ongoing process for all companies to constantly improve the use of their existing customer base. (As a matter of fact, I saw one of ADLPs offer in one of my orders on venteprivée.com so it shows that ADLP is setting up good partnerships with other companies).

Threats

Everybody is moving towards the offering of marketing solutions on social networks. There could be a frontal confrontation with advertising companies which are focusing also on this type of activity.
Newspaper/magazine industry is going to face tough challenges in the coming years with the internet

In a next post, I will continue to sutdy the financial data of ADLP.

I hope you liked the post! Don't hesitate to comment in French or in English!

I have got 550 shares of ADL Partner.

Cheers

Jeremy