Ten Belgian companies knock Warren Buffett

Logistics real estate developer VGP received the Value Creation Award Tuesday night as the Belgian company that created the most added value over the past decade. Along with nine other Belgians, VGP knocked off Warren Buffett's holding company Berkshire Hathaway.

Since 2007, Ghent-based asset manager Value Square has been compiling an annual list of Belgian companies that created the most fundamental value over the past decade. Each time, it compares them to the value investor par excellence: the holding company Berkshire Hathaway of legendary American super investor Warren Buffett.

'To calculate the fundamental value, we take the evolution of the book value per share, added to the net dividends paid,' says Patrick Millecam, partner and senior asset manager at Value Square. Book value is equal to a company's equity. That increases when a company transfers profits, or decreases when it loses.

13.6%
- Warren Buffett realized value creation of 13.6% per year over the past decade.

Buffett realized a 259 percent increase in value, or 13.6 percent per year, between 2013 and the end of 2023. That is more modest than his historical performance. Since he took over at Berkshire Hathaway in 1964, he managed to climb his holding company's book value an average of 18.3 percent a year. The stock price rose an average of 19.9 percent annually. 'Proof that in the long run the stock price follows the fundamental value creation,' Millecam stressed.

Although Buffett thus became somewhat easier to beat, only ten Belgian-listed companies succeeded over the past decade. VGP tops the list and was able to receive the gold award for the third year in a row. The developer and lessor of logistics parks, controlled by the Van Geet and Van Malderen families, created 25.5 percent value per year.

The Van Geet family managed to get out of the interest rate crisis without too much damage and did better than many other developers.
- Patrick Millecam

'VGP shares lost heavily in 2022 because of the sudden and steep interest rate climb, but were able to make up some of that loss in 2023,' Millecam explained. 'At ten years, VGP investors cannot complain. The stock market return is 619 percent, or 21.8 percent a year. The Van Geet family managed to get out of the interest rate crisis without too much damage and did better than many other developers. Instead of very low, we are now at more normalized interest rates. VGP owes its strong performance to its focus on prime locations. Its parks are near concentrated residential or manufacturing centers that are easily accessible. VGP is also surfing the long-term trend of e-commerce, for which quality logistics real estate is indispensable.'

Melexis

The silver award goes to Melexis. It is the fifth time in a row that the chip developer has been stranded in the second podium spot, with value creation of 22.4 percent annually. Melexis benefits from the electrification of the vehicle fleet, and the increased demand for greater comfort and safety in cars. This requires more semiconductors per car. 'There are an average of 18 chips from Melexis in each car. An all-electric BMW iX has 70. It shows that electrification is very important for the growth of Melexis,' says Millecam.

Floridienne

Floridienne hijacks the bronze medal. Holding is advancing strongly. Last year it prided itself on place 52. Floridienne managed to grow its value 17.4 percent annually. The stock market return did even better at 25.5 percent. 'Floridienne owes its rise to its subsidiary Biobest, which specializes in the biological control of crops,' says Millecam. 'To finance the acquisition of more than half a billion euros from Brazilian sector peer Biotrop, Biobest made a capital increase. Well-known investors stepped in, such as Sofina, M&G and Tikehau. In the process, Biobest was valued at more than 1.1 billion euros. That revaluation boosted Floridienne's equity, which went up more than 150 percent by 2023.'

Stragglers

On average, Belgians delivered a value creation of 6.59 percent in the stock market. The stock market return leans close to that with a climb of 6.11 percent. With some companies, there is a big discrepancy. Like at Bpost, where investors undercut the stock because of the loss of the newspaper contract and possible fraud in its tender. That wiped out the impact of the generous dividends. Other stocks where stock prices lag behind their fundamental value are EVS, Tessenderlo, Smartphoto and Econocom.

Furthermore, the study shows that family businesses outperform those without a controlling family shareholder. Family businesses achieved a stock market return of 7.09 percent, compared to 3.04 percent for the others.

Dividends appear to be very important. Eleven companies have been able to maintain or increase their net dividends for at least a decade: Aliaxis, Barco, Brederode, Care Property, Econocom, Etex, Lotus, Sofina, Texaf, UCB and WDP.

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References:

• Source: The Time
• Link: https://www.tijd.be/markten-live/nieuws/aandelen-brussel/tien-belgische-bedrijven-kloppen-warren-buffett/10547384.html
• Author: Serge Mampaey
• Date: 22/05/2024