News: Titanium Transportation capital allocation and Unidata preliminary results

Titanium Transportation

I know I haven’t shared the full thesis on this company yet (I will in the future), but along with Unidata, it’s my biggest position and one I believe has the potential to be a compounder.

Titanium suspends quarterly dividend

The past few years haven’t been great for this company. First, the U.S. faced overcapacity after COVID, leading to margin compression. Second, the company invested heavily in Capex to renew its fleet. And third geopolitical tensions.

As you know, under Trump, USA started a commercial war with Canada (and other countries), and while tariffs are currently suspended for 30 days, investors are worried that they could return. Would that hurt the company? Of course. But I personally don’t think it will happen, and here’s why:

  • No one actually benefits from these tariffs, and Trump knows it.
  • The upcoming Canadian elections could bring a more Trump-friendly government, which might help ease tensions.

That said, the company needs to be prepared for a worst-case scenario—tariffs + a weak trucking market. Management clearly understands this, which is why they’re prioritizing balance sheet strength over dividends.

My thoughts about this news? Positive. Titanium has a high debt load due to its acquisition-driven growth strategy, so suspending the dividend to improve capital allocation makes sense. Reducing debt now puts them in a stronger position for the long term.

Stock options incentive plan

Titanium announced the grant of 393,900 stock options to employees and directors. Given that it has approximately 44.32 million outstanding shares, this grant represents less than 1% of the total shares, indicating a minimal dilution effect. Implementing such stock option plans can enhance shareholder alignment by incentivizing employees and directors to focus on the company’s long-term success, potentially leading to increased shareholder value.

While some may view stock option grants as potentially dilutive or as a sign of management rewarding itself, the relatively small size of this grant and its structured vesting schedule suggest a strategy aimed at fostering long-term growth and aligning the interests of the company’s leadership with those of its shareholders.

I haven’t updated my valuation model yet to include slower growth, reduced debt and no dividend. Once I do, I might decide to increase my Titanium position, which is currently at 10% but I’m sure I won’t close the position.

Unidata

Preliminary results presented today show:

  • No revenue growth vs. 2023 (as expected).
  • EBITDA margin up to 27% vs. 25.9% in 2023 (top of the forecast range).

Following the news, the stock jumped 4.25%, from 2.59 to 2.70.

Good news! 

Unidata – My favourite Europe microcap

When I first heard about this company in an investment webinar, I looked it up on TIKR and realized it’s a microcap ($83M market cap), Italian (which usually means undervalued), and in a simple, easy-to-understand sector: fiber.

The company was founded in 1985 as a hardware business. Then, in 1994/95, it started developing as an ISP. In 1999, it was sold to Cable & Wireless, but it was reacquired in 2001. By 2002, the company had started deploying fiber and transitioned into a telecommunications provider operating in the Lazio region.

The company operates in these segments:

  • Fiber
  • Cloud & Data Center
  • IoT
  • Cybersecurity and managed services

This thesis is going to focus on the most important (and potentially high-growth) segment: fiber. And I love it because:

The other segments definitely have growth potential too, like datacenters (the company is building a completely green datacenter in Italy) and IoT (they deployed a LPWA network, which also has growth potential). But these segments are relatively small compared to fiber.

Financial overview

The company revenues has grown 63% CAGR from 2019, EPS in the same time 35%.

In 2023 the revenues growth 81% thanks to the acquisition of TWT which helped the company expand into Lombardia.

TIKR

The main growth driver has been the expansion and deployment of fiber, both B2C and B2B.

In 2018 the fiber network covered 2,100 km, and as of the H1 2024 report, it has expanded to 7,400 km. By Q2 2025, a new submarine cable to southern Italy is expected to be completed—a project developed in partnership with Uniterreno (a Unidata subsidiary) and Azimut (an investment fund).

Related to margins, in 2024 the company is projected to reach a 26% EBITDA margin (consolidated with TWT). Their industrial plan 2025 target an improvement on EBITDA margin close to ~30% which is in line with the industry median.

Related to FCF generation, in recent years the FCF margin was small and even negative most of the years due to high CAPEX investment, but it’s expected to improve the coming years.

Related to debt the company always has a slow Net Debt / EBITDA ratio (below 1x) but in 2023 with the acquisition of TWT, the ratio up to 2x but it still manageable for this kind of company with highly recurring income.

When it comes to FCF generation, the margin has been small (and even negative in most years) due to heavy CAPEX investments. However, it’s expected to improve in the coming years.

When we see debt, the company has always kept a low Net Debt/EBITDA ratio (below 1x). But in 2023, following the TWT acquisition, the ratio jumped to 2x, still very manageable for a company with highly recurring revenue.

Next years

The company target to growth revenue by 12% and achieve an EBITDA margin between 29% – 30%, from 2025 to 2027 as their present in the industrial plan 2025.

Additionally, a €56 million CAPEX investment is planned until 2027, covering:

  • Continued fiber network deployment.
  • The completion of Uniterreno (submarine cable project).
  • A new datacenter in Italy (Unicenter).

I agree with the target growth and I’m pretty confident they’ll be achieved, mainly because Italy still has low coverage of FTTH network (only 49% vs 69% avg EU).

Additionally the customers are shifting from big operators to smaller ones—a trend similar to what’s happening in Spain, where companies like DIGI has been rapidly gaining market share. The company highlights this:

Image from H1 2024 Report

To sum up, I see strong market growth potential in Italy, margin improvement, and high cash flow generation. And, the company stands to benefit from new segments as it continues to expand.

Valuation

When comparing Unidata’s valuation with similar companies in Italy, it’s clear that both the company and the sector are trading at depressed valuations.

All of them are affected by low valuation metrics due to their status as European microcaps, except for Intred, which is more efficient with a higher ROIC, better margins, and a larger market cap—hence the higher valuation.

I see an opportunity for multiple expansion over the next few years, targeting 6x EV/EBITDA and around 11x P/E and MC/FCF, which seems reasonable for Unidata. Also, companies like this have a high chance of being acquired by a larger player due to their low valuation and the fragmented market.

I’m estimating 10% growth, with the company reaching a 26% EBITDA margin in the coming years alongside multiple expansion:

A few key points to highlight:

  • I don’t estimate buybacks (though they’re highly likely in the future, as the company has done them before)
  • Dividend yield 0%
  • FCF will be low in 2025 and 2026 due to an expected CAPEX of €56 million but should stabilize from 2027.

Using this, we get a high CAGR for 2026E:

MultipleIntrinsic Value 26EUpside from €2.70
EV/EBITDA6x€5,96120%
P/FCF11x€4,9683%
P/E11x€5,0085%

For this reason (and I think this is a conservative estimate), I expect strong growth for this stock.

I have opened a 10% weight position.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I hold a material investment in the issuer’s securities.

Fountaine Pajot ($ALFPC)

Today I shared this French Microcap (€166M market cap) that designs and builds luxury catamarans. I found out about it because two funds I follow—Independence AM and Amiral Gestion—have positions in it, which seems like a good sign.

Financial Overview

The company’s revenue has grown every year (except for 2009 and 2020). From 2018 to 2024, it saw a 17% CAGR in growth, with a stable EBITDA margin of 13%–15% and an EPS growth of 20% CAGR.

2018201920202021202220232024
Revenue MM136,81207,11172,87202,31219,86276,82351,30
EBITDA21,6626,9327,4132,7034,1942,4967,00
EBITDA Margin %15%13%15,8%16%15,5%15,3%19%
6,668,41
4.8610.069.796,8920,10

Of course, this kind of luxury product is cyclical and requires consistent CAPEX investment, with an average Sales/CAPEX ratio of around 5%. On top of that, the company can generate free cash flow every year.

2018201920202021202220232024
Free Cash Flow27.9215.1913.0551.2546.3619.11-9.69

In 2024, FCF was impacted by increased working capital investments to prepare for next year’s order book.

Regarding debt, the company consistently holds a strong cash position (exceeding its market cap) and keep a low level of debt.

2018201920202021202220232024
Net Debt / EBITDA0.13x-0.17x-0.97x-2.17x-3.11x-2.83x-1.54x

The company pays dividends almost every year, usually between 1%–2%, and do a small amount of buybacks. The issue with the buybacks is the low number of outstanding shares and the lack of liquidity.

So, the company has a history of growth, has a lot of cash in balance (even more than its market cap), avoids dilution, does buybacks, and pays dividends… but why is it still so cheap?

I think several things comes together: Europe microcap, low liquidity and expected drop in sales for next two years due to high post-covid sales.

Next years

The company expect a slowdown of this sales for the next years and it can be inferred due to they highly investment on working capital this year (this going to help FCF next year). The company doesn’t give any guidance butd the analyst expect (17%) 2025E – (6%) 2026E.

But to help to improve the efficiency and partially offset the expected drop sales, the company announce a plan in they last communication:

The new 2028 plan is based on the following major pillars:

  • Product innovation, with the launch of 11 new models: 6 catamarans and 5 monohulls;
  • Enhanced customer service, aimed at improving the experience and satisfaction;
  • A capacity investment and modernization plan, with a total budget of nearly €19 million over four years;
  • Human capital development, through skills enhancement, talent retention, and continuous improvement of working conditions;
  • Environmental commitment, by continuing technical innovations and implementing a zero-carbon trajectory.

Let’s talk about valuation

Comparable companies valuation:

CompanyNTM EV/EBITDANTM MC/FCFNTM P/E
San Lorenzo SpA6.37x18.41x10.90x
Beneteau SA8.29x11.27x16.19x
SA Catana Group5.15x8.92x9.26x
Fountaine Pajot1.66x46.11x7.90x

SA Catana Group is the closest as it focuses on catamarans and has similar ROE, ROIC, and ROA. Plus, it’s also a French microcap.

ROEROICROA
SA Catana Group32%26,4%10,9%
Fountaine Pajot35,2%34,3%10,6%

For this reason, I think Fountaine Pajot’s valuation is ridiculous.

Now, back to valuation—I’d still be very conservative, expecting:

  • 2025-2026: I will use analysts’ estimates of a -10% CAGR revenue and then back to 3% Growth (average catamaran market expected)
  • FCF should improve as the company starts benefiting from positive working capital and customer payments (as it always has).
20252026202720282029
Revenue (M)289262270278286
EBIT Margin % 15%15%15%15%15%
EBITDA (M)44,442,143,44,746
Net Income (M)1816171718
FCF (M)2220212122
Shares Outstading (M)1,61,61,61,61,6

Target Price

For this valuation, I’m expecting some multiple expansion, but still at a discount compared to peers due to low liquidity.

  • EV/EBITDA = 4x
  • MC/FCF = 7x
  • PER = 7x
  • Dividend Yield = 2%
20252026202720282029
EV/EBITDA€183€180€187€193€199
PER€152€146€151€152€162
MC/FCF€167€163€169€175€180

I see an interesting opportunity here, with high expectations for multiple expansion and maybe even an offset to declining revenues!

I opened a 5% weight position at 98.40

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I hold a material investment in the issuer’s securities.

A bargain in a spin-off: Havas NV

This is my first special situation position! And I wrote this at 15 December but I decide to publish today as my first post in this blog.

Why Vivendi SE split their divisions?

Vivendi decided to spin off three divisions, including Havas NV, with two main goals:

  • Unlock potential: Let each division spread its wings and fly (or at least try to).
  • Improve valuation: Sometimes, the sum of the parts is worth more than the whole.
Vivendi structure after spin-off
Vivendi structure after spin-off

Havas NV (my focus)

Havas NV started trading on December 16, 2024, and while the market’s initial reaction was a big sell-of (commonly on the spin-off), I think there’s more to this story. Let’s dig in.

Founded in 1835 in Paris, Havas is one of the largest marketing and communications groups in the world in terms of revenue. It currently has more than 23,000 employees.

They have three division on Havas:

  • Havas Creative: Advertising, branding, digital transformation and social media
  • Havas Media: Division responsible for optimizing advertising investment through the use of data.
  • Havas Health: Division responsible of communication and advertising of health sector.

At first glance, Havas NV might not seem like the most exciting company to own. But here’s the thing: it’s a stable, cash-generating business with minimal CAPEX requirements. And at this price, it’s looking like a bargain.

The company has done a great job in a stable sector over the last 3 years:

  • Revenue: +7% annually
  • Net Income: +10% annually
  • EBIT: +9% annually
  • Cash Conversion Rate (CCR): 89% (that’s almost every euro of profit turning into cash!)

Low level of debt in balance BUT they have an off-balance debt of 300 millions how they expose in their spin-off prospectus

Valuation

The stock started trading at €1.80 but quickly fell to €1.45. At this price, Havas NV looks cheap. But is it too cheap? Let’s look at it:

Metric2024E
EBITDA447M
FCF236M
EPS0,19
Shares Outstading991M
Net Debt448M
Share Price1,45
Market Cap1436M
Enterprise Value1884M

Using this we get the following valuations:

MetricValue
EV/EBITDA~4x
MC/FCF~6x
PER~7x

If we compared this valuation metric to similar companies:

ComapanyEV/EBITDAMC/FCFPERMarket Cap
Publicis Groupe SA~8x~13x~11x25B
Omnicon Group~8x~10x~10x16B
Interpublic Group of Companies~8x~10x~10x14B
Havas~4x~6x~7x1.4B

We can see that at this price the company looks a bit cheap, and I think it is because of the sales force of a spin-off, a not-known company and the factor of being a small/mid cap.

Valuing the company with some reasonable multiples (with a discount of 20% from similar companies because it’s smaller) and including their dividend policy of 40% of net income attributable to the group (rounding to 4% dividend yield) that they put in the prospectus, we get:

MultiploIntrinsic ValueUpside from 1.45
EV/EBITDA6x2,251%
MC/FCF8x1,9131.72%
PER8x1,549%

Using these multiples (with a 20% discount because Havas NV is smaller than its peers), the company looks undervalued.

Havas NV is a stable, cash-generating business with a proven track record. It’s not the funniest stock out there, but sometimes the boring ones are the most profitable. Plus, at this price, the downside seems limited, and the upside? Well, let’s just say I’m optimistic.

I started with a small of 3.5% in my portfolio. Just dipping my toes in before diving in. If Havas NV performs as I expect, I will add more over time.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I hold a material investment in the issuer’s securities.