Tuesday, July 8, 2014

Installux Expanding Despite Economy

The Installux CEO Chistian Canty recently gave an update on the company. In it, he expressed pessimism towards the current French economic situation — just like last year. However, he believed that the company could maintain its revenue and margins in the company's core aluminum business in the current year. He also said management could try to grow the company using its excess cash and equivalents to acquire businesses. However management feels that is risky because of the current economic malaise. Instead, they decided to focus on organic growth in the coming two years.

The company owns six divisions. One is FAC, which does aluminum coloring and surface treatment.  The company will double the floor capacity of this division in 2015. The management feels they can fund the expansion with increased business and, if necessary, by bringing back work doled out to subcontractors.

A second division is IES, which makes metal of a specific cross-sectional shape. This is a process called extrusion. Management has decided to buy a second press to do this job as the division has been running at full capacity for two years now. The location for the expansion is still unknown, but it will happen in 2015 also. IES is the largest of the company's six divisions.

In other company news, preliminary first quarter numbers indicate an 8% increase in revenue. However, Canty said the number can fluctuate unpredictably from month to month.

I bought this stock 16 months ago and it has risen 45%. I am holding on to it because I believe the company is undervalued without the expansion plans. With it, I have even more to reason to wait to see how things go in the coming year or two.


  1. "I am holding on to it because I believe the company is overvalued without the expansion plans."

    why would you hold on if you think the company is overvalued?

  2. Thanks Mike, I corrected it, I obviously meant undervalued.

    Glad to see someone is paying attention to my blog!