Investment Theme: Gift of Sight

I have been digging deep into a couple of listed companies that are in the eyewear industry as the number of people wearing spectacles, contact lenses /& sunglasses are increasing due to changes in our lifestyle and our bad habits of constantly being connected to our gadgets.

Source: GVNV website

I looked at Grandvision NV (GVNV), Safilo Group S.p.A (SFL), Luxottica Group SpA (LUX) and Essilor International Compagnie Generale D'Optique SA (EI) and Hoya Corporation (Hoya). I think people prefer snippets of stocks rather than in-depth analysis, so that's what I'll be doing from now on.

Source: LUX website

Of the four, I am most interested in LUX and EI for different reasons. LUX's business model is pretty much evenly split between wholesale and retail whereas GVNV and SFL are >90% either wholesale or retail. LUX has an impressive track record and it seems to be a favored partner with the luxury brands yet they possess strong brands such as Oakley and Ray Ban in their business.

They are vertically integrated with a strong distribution network through LensCrafters and Sunglass Hut, glasses.com just to name a few. The founder has an interesting management style such that none of his children work for him as he believes that you can't fire your child but you can fire your executive! There was some talk on the street when his top executive left suddenly and now it seems he's back at work with two co-CEOs.

I find LUX's business model far more compelling and strategy wise seems to be making all the right moves. That led me to research on GVNV which just IPOed two months ago with a billionaire family as its main shareholder. It's currently trading slightly than its IPO price of $20 but I don't think I'll be dabbling into it.

Source: SFL website

SFL was next and the thing I noticed was that Kering will be pulling Gucci back into in-house production in a few years time. Gucci is languishing it seems but that's a post for another day. I'm still very keen on Italian listed companies in various sectors but SFL is one that I will be giving a miss.

Source: EI website

EI was brought to my attention by ACCICB and his main concern was the huge debt they have. Back then, I didn't have time to read the annual report but I told him that while debt is always a concern, debt can be good debt if they are able to repay it off and its important to understand the underlying nature of that debt. I regretted not making time to read EI's annual report because this is one company I will want to have in my portfolio.

Source: Hoya website

Yet again, the price seems awfully high but then when ACCICB first told me about it, it was only at 80+! I like that EI's growth is made up of both organic and M&A and unlike Hoya, EI focuses solely on the eyewear business. Hoya has quite a few business segments thus it is not a like for like comparison with EI.

I have been slowing down my research as ACCICB says I shouldn't kill my interest by being over zealous. I do find it fun when I find gems but there are quite a few stones that you have to pick out and time which has been spent will not come back. Still, the fun of being in the game keeps me going and the beauty is that there are so many exchanges and companies in the world. The world is truly my oyster. 

Comments

  1. In the investment world people normally talks about goose and the golden egg. But you are looking at it at a slightly different angle. The world is your oyster! Eat the oyster and keep the pearl.

    This Tennessee lady is so lucky, she struck 50 pearls in an oyster.

    http://www.wjhl.com/story/28717161/tennessee-woman-dining-at-restaurant-finds-50-pearls-in-oyster

    ReplyDelete
    Replies
    1. She's so lucky! The meal more than paid for itself with the 50 pearls!

      Delete

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