I didn't notice that part, thanks for pointing it out. And it's actually adding value to the write-up. Let's see what I missed:
BSCCB - Brembo SGL Carbon Ceramic Brakes.
A 50:50 joint venture making carbon ceramic brake discs for premium vehicles.
Brembo: Brembo N.V. is an Italian manufacturer of automotive parts that most notably produces brakes and rims, especially for high-performance cars and motorcycles.
The investment angle: It's the bright spot in SGL's troubled Carbon Fibers division. As we said the division posted an operating loss in 9M 2024 (€19.6M). But, BSCCB contributed €11.6M in EBITDA and paid a €15M dividend! The venture's expanding aggressively - €150M investment through 2027 to increase capacity by 70%.
Numbers, and the BSCCB products, suggest strong market positioning in premium automotive, which should be resilient. BSCCB's consistent profitability provides crucial support to SGL's financials right when they're taking a €60-80M writedown on Carbon Fibers. 9M / Q3 2024 report has all the details.
It's definitely a plus I need to mention. I will amend the article as soon as I can, it makes the bullish thesis a bit stronger, and I really like it as well.
Thank you so much for the question.
If you have other details to add, please let me know. I couldn't find any more for now.
If I remember correctly, BSCCB had € 250m revenues in 2023 and € 50m EBIT, selling carbon ceramic brakes to eg Porsche, Ferrari and Lamborghini.
Book value of the 50% JV stake is € 60m. But if we assume a 10x EBIT multiple, that would be € 500m fair value. 50% belongs to SGL, so € 250m. Seems like a really attractive and valuable asset.
Also, the Carbon Fibre business will soon be gone. If they are lucky they can “sell“ it (at best for € 0). I think they will shut it down. That would be costly but I guess the market would appreciate it nonetheless.
They will not sell BSCCB. They are trying to sell the loss-making part of the carbon fibre business. I think they will have to shut it down and incur further write-downs as well as cash out for severance payments.
Very nice write-up of SGL. I am following SGL for some time now and I am still undecided. Are you leaning towards the bearish or the bullish thesis?
I do believe there are yet some possible new business fields to come (This is actually how I discovered SGL, as they produced some cooling mechanism for a new nuclear power plant). This, in combination with SGLs ability to reinvent itself, highlighted by you, might push me towards the bullish case. However, maybe those other business cases are too far in the future to be relevant here. I am undecided :D
I apologise for missing this comment. Got too focused on the BSCCB from the other one.
> produced some cooling mechanism for a new nuclear power plant
Very interesting, do you have more information on that?
SGL has been doing well lately.
Today it's 6% up and I cannot find any news that can take credit for that. Either some bigger players took notice, or some pre-election move towards smaller industrial companies.
I personally took a position at the end of Jan, and I'm glad I did. Let's see how it plays out.
Thoughts on BSCCB?
I didn't notice that part, thanks for pointing it out. And it's actually adding value to the write-up. Let's see what I missed:
BSCCB - Brembo SGL Carbon Ceramic Brakes.
A 50:50 joint venture making carbon ceramic brake discs for premium vehicles.
Brembo: Brembo N.V. is an Italian manufacturer of automotive parts that most notably produces brakes and rims, especially for high-performance cars and motorcycles.
The investment angle: It's the bright spot in SGL's troubled Carbon Fibers division. As we said the division posted an operating loss in 9M 2024 (€19.6M). But, BSCCB contributed €11.6M in EBITDA and paid a €15M dividend! The venture's expanding aggressively - €150M investment through 2027 to increase capacity by 70%.
Numbers, and the BSCCB products, suggest strong market positioning in premium automotive, which should be resilient. BSCCB's consistent profitability provides crucial support to SGL's financials right when they're taking a €60-80M writedown on Carbon Fibers. 9M / Q3 2024 report has all the details.
It's definitely a plus I need to mention. I will amend the article as soon as I can, it makes the bullish thesis a bit stronger, and I really like it as well.
Thank you so much for the question.
If you have other details to add, please let me know. I couldn't find any more for now.
If I remember correctly, BSCCB had € 250m revenues in 2023 and € 50m EBIT, selling carbon ceramic brakes to eg Porsche, Ferrari and Lamborghini.
Book value of the 50% JV stake is € 60m. But if we assume a 10x EBIT multiple, that would be € 500m fair value. 50% belongs to SGL, so € 250m. Seems like a really attractive and valuable asset.
Also, the Carbon Fibre business will soon be gone. If they are lucky they can “sell“ it (at best for € 0). I think they will shut it down. That would be costly but I guess the market would appreciate it nonetheless.
Is it me or you divided twice by 50% there?
Seeing that profitable part of that division, makes me think, if they do sell, why announce an investment up to 2027?
They will not sell BSCCB. They are trying to sell the loss-making part of the carbon fibre business. I think they will have to shut it down and incur further write-downs as well as cash out for severance payments.
My understanding was that that division includes BSCCB. If not, and they can keep it, even better.
Very nice write-up of SGL. I am following SGL for some time now and I am still undecided. Are you leaning towards the bearish or the bullish thesis?
I do believe there are yet some possible new business fields to come (This is actually how I discovered SGL, as they produced some cooling mechanism for a new nuclear power plant). This, in combination with SGLs ability to reinvent itself, highlighted by you, might push me towards the bullish case. However, maybe those other business cases are too far in the future to be relevant here. I am undecided :D
I apologise for missing this comment. Got too focused on the BSCCB from the other one.
> produced some cooling mechanism for a new nuclear power plant
Very interesting, do you have more information on that?
SGL has been doing well lately.
Today it's 6% up and I cannot find any news that can take credit for that. Either some bigger players took notice, or some pre-election move towards smaller industrial companies.
I personally took a position at the end of Jan, and I'm glad I did. Let's see how it plays out.