{ "docId": "019dd923-622c-750b-8b96-54d2d65f46fb", "docSlug": "f004c0c14f61", "documentTitle": "Bolloré SA (BOL FP)", "authorId": "51_Muddy_Waters", "authorName": "Carson C Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2015-02-17 00:00:00", "orientation": "portrait", "aspectRatio": 0.78790915, "pageNumber": 19, "pageCount": 26, "prevPage": 18, "nextPage": 20, "slideType": "appendix", "function": "summarize", "density": "overcrowded", "nDataPoints": 4, "notes": "Contains footnotes referencing specific news sources and financial data points.", "elementsJson": [ "paragraph", "bullet_list", "footnote" ], "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-54d2d65f46fb/19", "deckHref": "/decks/019dd923-622c-750b-8b96-54d2d65f46fb", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-54d2d65f46fb.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-54d2d65f46fb#slide-19", "components": [ { "bbox": null, "kind": "callout", "text": "BOL is highly opaque, and therefore leaves a decent bit to be desired in the governance department.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-64cd-733b-ac9f-c6cbbce692ad", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.72, "x": 0.14, "y": 0.74 }, "kind": "list", "text": "Many of BOL's operations are in frontier markets where business practices are unsavoury and corruption is endemic. We generally assume companies that are successful on a large scale in such markets, at least to some extent, play by these local rules. There are developed world anti-corruption laws that prohibit", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "041fb200-09c1-4743-8627-c04783665a45", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.72, "x": 0.14, "y": 0.59 }, "kind": "list", "text": "Our thesis mainly has to do with the value of assets that each share owns, and we use theoretical dividend distributions to illustrate this concept. With so many entities, there could be adverse tax consequences if BOL were to distribute assets or cash (which we do not expect it to do in the foreseeable future). Our valuation and analysis is therefore theoretical in that it ignores tax consequences, which are beyond our understanding. However, we trust that nobody would be more motivated than Mr. Bolloré to manage tax exposure, and hopefully he will do so effectively.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8799cc9a-d429-43c5-b8f8-201e867bca05", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.72, "x": 0.14, "y": 0.44 }, "kind": "list", "text": "BOL is highly opaque, and therefore leaves a decent bit to be desired in the governance department. The company provides very little granular information on its various businesses and investments, and it could therefore be hard to anticipate a downturn in its logistics operations. Ordinarily, we would shy away from investing in a company this opaque; however, the market's lack of understanding of its corporate structure creates too compelling of an arbitrage opportunity. Increasing transparency could further close the valuation gap.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f56634e5-c2b3-450e-93ee-001510f9e391", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.72, "x": 0.14, "y": 0.28 }, "kind": "paragraph", "text": "BOL controls both Blue Applications and BLUE, and over 95% of BLUE's revenue is attributable to Blue Applications. BLUE also has agreed a long-term supply contract with a Blue Applications-related entity, Blue Car, which extends until December 2022. In addition, Blue Solutions has seven call options that enable it to acquire all of the entities of the Blue Applications group from BOL. These are excisable from September 1st 2016 to June 30th 2018. Since listing, BLUE's shares have increased 87.9%.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "308f7373-989c-4bbc-b15d-c912097d62b2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.72, "x": 0.14, "y": 0.13 }, "kind": "paragraph", "text": "Blue Solutions SA (BLUE FP) After BLUE's late 2013 IPO, BOL owns 89% of the company. BOL is using BLUE to supply Blue Application's electric vehicle efforts. Prior to the IPO, BOL has spent an estimated €1.7 billion developing the technology through acquisitions, battery related research and factory construction. The battery technology, called lithium metal polymer (LMP), used by Blue Solutions works differently from traditional batteries in that it uses layers of thin film. Mr. Bolloré claims that these batteries are safer than traditional lithium batteries, and have longer storage life.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b955f439-3614-431f-b766-c32878c1a131", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.72, "x": 0.14, "y": 0.08 }, "kind": "paragraph", "text": "some doubt that MB can compete for mandates outside of the Italian market. Recently MB placed Mr. Bolloré's daughter, Marie, on the board.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d006a2fa-3799-4b92-9966-198d27b59a63", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.72, "x": 0.14, "y": 0.82 }, "kind": "source-note", "text": "Footnotes 60-66", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e42a2bd9-0a97-4698-a278-e85b7ba5fb29", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.05, "x": 0.14, "y": 0.41 }, "kind": "title", "text": "Risks", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b6bf2276-be48-40b4-ad04-ef1ccc3292d9", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Audience Definition", "slug": "audience-definition", "agent": "Storyteller", "layer": "slide", "matchId": "a4956165-0fd8-4b63-881d-b6a2dbc5d6ed", "evidence": "BOL is highly opaque, and therefore leaves a decent bit to be desired in the governance department.", "confidence": 0.7 }, { "name": "Cognitive bias", "slug": "cognitive-bias", "agent": null, "layer": "slide", "matchId": "3107d079-6d3e-43fd-8e48-f80af9e49bc9", "evidence": "Many of BOL's operations are in frontier markets where business practices are unsavoury and corruption is endemic.", "confidence": 0.5 } ], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }