Ten Belgian companies beat Warren Buffett

The developer of logistics real estate VGP received the Value Creation Award on Tuesday evening as a Belgian company that created the most added value in the past ten years. Together with nine other Belgians, VGP acquired Warren Buffett's Berkshire Hathaway holding company.

Since 2007, Ghent asset manager Value Square has been compiling an annual list of Belgian companies that created the most fundamental value in the past ten years. It always compares them to the value investor par excellence: the Berkshire Hathaway holding company owned by legendary American superinvestor Warren Buffett.

“To calculate the fundamental value, we assume the evolution of the book value per share, added to the net dividends paid,” says Patrick Millecam, partner and senior asset manager at Value Square. The book value is equal to a company's equity. This increases when a company transfers profits, or decreases when losing.

13.6%
- Over the past decade, Warren Buffett has achieved a value creation of 13.6 percent per year.

Between 2013 and the end of 2023, Buffett achieved an increase in value of 259 percent, or 13.6 percent per year. That is more modest than his historical achievements. Since taking control of Berkshire Hathaway in 1964, he has managed to increase the book value of his holding company by an average of 18.3 percent per year. The price rose by an average of 19.9 percent annually. “Proof that the stock price follows fundamental value creation in the long term,” emphasizes Millecam.

Although Buffett thus became a little easier to beat, only ten Belgian listed companies succeeded in this over the past decade. VGP tops the list and received the gold award for the third year in a row. The developer and landlord of logistics parks, controlled by the Van Geet and Van Malderen families, created 25.5 percent value per year.

The Van Geet family managed to get out of the interest rate crisis unscathed and did better than many other developers.
- Patrick Millecam

“VGP stock lost sharply in 2022 due to the sudden and steep rise in interest rates, but was able to make up for part of that loss in 2023,” explains Millecam. “In ten years, VGP investors should not complain. The return on the stock market is 619 percent, or 21.8 percent per year. The Van Geet family managed to get out of the interest rate crisis unscathed and did better than many other developers. Instead of very low ones, we are now at more normalized interest rates. VGP owes its strong performance to its focus on top locations. The parks are located near concentrated residential or production centers that are easily accessible. VGP is also surfing on the long-term trend of e-commerce, for which quality logistics real estate is essential. '

Melexis

The silver award goes to Melexis. This is the fifth time in a row that the chip developer is stranded on the second podium, with a value creation of 22.4 percent per year. Melexis benefits from the electrification of the fleet and the increased demand for greater comfort and safety in cars, which requires more semiconductors per vehicle. “There are an average of 18 Melexis chips in each car. A fully electric BMW iX has 70, and it shows that electrification is very important for Melexis' growth,” says Millecam.

Floridienne

Floridienne takes the bronze medal. The holding company is advancing strongly. Last year, it ranked 52nd and Floridienne managed to grow its value by 17.4 percent annually. The stock market performance fared even better at 25.5 percent. “Floridienne owes its rise to the Biobest subsidiary, which specializes in the biological control of crops,” says Millecam. “To finance the acquisition of more than half a billion euros from Brazilian sector partner Biotrop, Biobest made a capital increase. Well-known investors, such as Sofina, M&G and Tikehau, stepped in. In addition, Biobest was valued at more than 1.1 billion euros. That revaluation boosted Floridienne's equity, which increased by more than 150 percent in 2023. '

Stragglers

On average, Belgians created a value creation of 6.59 percent on the stock market. The stock market return is close to that, with a climb of 6.11 percent. There is a big discrepancy among some companies. Like Bpost, where investors lost their share due to the loss of the newspaper contract and possible fraud in tendering it. This nullified the influence of the large dividends. Other stocks where stock prices fall short of their fundamental value include EVS, Tessenderlo, Smartphoto and Econocom.

The study also shows that family businesses score better than companies without controlling family shareholders. Family businesses achieved a return on the stock market of 7.09 percent, compared to 3.04 percent for the others.

Dividends appear to be very important. Eleven companies have been able to maintain or increase their net dividends for at least ten years: Aliaxis, Barco, Brederode, Care Property, Econocom, Etex, Lotus, Sofina, Texaf, UCB and WDP.

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References:

• Source: De Tijd
• Link: https://www.tijd.be/markten-live/nieuws/aandelen-brussel/tien-belgische-bedrijven-kloppen-warren-buffett/10547384.html
• Author: Serge Mampaey
• Date: 22/05/2024