Vallourec and the midas touch of Vincent Bolloré

Sometimes you can simply buy companies because of the management or because someone specific bought a stake in the company, simply based on the confidence in that management or in that stakeholder. Vincent Bolloré, now worth USD 1.7 bln according to Forbes 500, is one of those people. His career began when he took over the family-owned conglomerate Bolloré, which is active in the maritime industry & cross-border trade with African countries. Then, he took a large stake in French construction group Bouygues, which he left a while later with quite some more money in his pockets. Some two years ago, he decided to buy a stake in Havas, a French advertising group of which he now is President and single largest shareholder after mounting a coup in 2005. Also in that year, he started building a stake in independent British market research group Aegis Group PLC. He has been aiming for a position on the board with his 29% stake, but has not succeeded so far. Whether you like his unorthodox way of buying himself into companies, what he does is usually good for shareholders. A great example of that is the French world leader in seamless steel tubes: Vallourec Group. But Vincent Bolloré having a 7.5% stake and being a member of the board is certainly not the only reason to invest in this company. Vallourec will be included in the CAC40 as of this month and has been known for keeping shareholders extremely happy. German steel producer Salzgitter sold its stake recently and benefited heavily. But growth is not over yet. Vallourec’s first half year net profit rose 214% compared to the previous year and the group expects sales for the second half year to be at least of the same magnitude. Especially encouraging is that the group foresees no slowdown at all in the oil, gas and power segments. Vallourec is currently looking at some acquisitions, especially in Europe, which should bring some more topline growth. Vallourec currently has a P/E of 13.5, below the sector average of 15.1. The current share price is EUR 201 and I would consider a share price target of at least EUR 250 in the first half year of 2007 realistic, concerning the sector strength and the company’s rapid growth in sales and profits.